Two Types of Futures on Binance
Binance perpetual futures are divided into two major categories: USDT-margined and coin-margined. Their core trading logic is the same (both involve trading on price movements), but they differ significantly in margin type, profit/loss settlement, and ideal use cases.
USDT-Margined Futures: Also called linear contracts or forward contracts. They use USDT as margin, and profits and losses are settled in USDT. This is currently the most mainstream contract type, used by the majority of traders.
Coin-Margined Futures: Also called inverse contracts. They use the corresponding cryptocurrency (such as BTC or ETH) as margin, and profits and losses are also settled in that cryptocurrency. For example, when trading BTC coin-margined contracts, you need BTC as margin, and your gains and losses are also in BTC.
The Margin Difference
This is the most intuitive distinction between the two contract types:
USDT-Margined:
- Margin: USDT
- All trading pairs share the same USDT margin pool
- No need to hold specific cryptocurrencies
- Margin value is stable (USDT is pegged to USD)
Coin-Margined:
- Margin: the corresponding cryptocurrency
- BTC contracts use BTC as margin, ETH contracts use ETH as margin
- You must already hold the corresponding cryptocurrency
- Margin value fluctuates with coin prices
Here's an example: You want to go long on BTC.
Using USDT-margined: You deposit 1,000 USDT as margin. Using coin-margined: You deposit 0.0167 BTC (equivalent to approximately 1,000 USDT) as margin.
The Profit/Loss Calculation Difference
USDT-Margined P&L:
Profits and losses are calculated directly in USDT, making them very intuitive.
Suppose you go long on 0.1 BTC at 60,000 USDT and the price rises to 62,000:
- Profit = 0.1 x (62,000 - 60,000) = 200 USDT
- Your USDT balance increases by 200
USDT-margined P&L works similarly to spot trading and is easy to understand.
Coin-Margined P&L:
Profits and losses are calculated in BTC, with a more complex calculation method.
Coin-margined contracts have face values denominated in USD (each contract is typically 100 USD), and the P&L formula is more involved:
Suppose you go long on 100 BTC contracts (face value 10,000 USD), entry price 60,000, exit price 62,000:
- Profit (BTC) = Face Value x (1/Entry Price - 1/Exit Price) = 10,000 x (1/60,000 - 1/62,000) = 10,000 x 0.000000537 = approximately 0.00537 BTC
Seems a bit convoluted? That's exactly why USDT-margined contracts are recommended for beginners.
The Position Value Difference
This is a critical but often overlooked distinction:
USDT-Margined: Your margin is in USDT, unaffected by market movements. Gains and losses are in USDT, with clear and straightforward value.
Coin-Margined: Your margin is in BTC. When BTC's price drops, your margin itself depreciates. This means:
If you're long and wrong (BTC drops), not only is your position losing money, but the USDT value of your margin is also shrinking — a "double loss."
If you're long and right (BTC rises), the BTC you earn is also appreciating — a "double gain."
For short positions, it's the reverse: if your short is profitable, you earn BTC, but BTC is falling (profits depreciate). If your short is losing, you lose BTC, but BTC is rising (losses increase in value).
This characteristic makes coin-margined contracts' P&L volatility greater than USDT-margined contracts.
Trading Pairs and Liquidity Differences
USDT-Margined:
- Very extensive trading pair selection, supporting hundreds of cryptocurrencies
- Major trading pairs have excellent liquidity
- All pairs share USDT margin, offering high capital efficiency
Coin-Margined:
- Relatively fewer trading pairs, mainly major coins like BTC and ETH
- Liquidity is generally not as good as USDT-margined
- Each pair requires its own separate cryptocurrency margin
Use Case Comparison
Scenarios suited for USDT-margined:
Most trading scenarios. If you simply want to take directional trades (long or short) on cryptocurrency prices, USDT-margined is the simplest and most straightforward choice.
Short-term trading. Since P&L settles in USDT, calculations are clear and management is easy.
Multi-asset trading. A single pool of USDT serves as margin for all trading pairs.
Beginner entry. Simple to operate, easy to understand.
Scenarios suited for coin-margined:
Hedging for long-term holders. If you hold BTC long-term and want to earn returns or hedge risk without selling your BTC, coin-margined contracts work well. For example, if you hold BTC but worry about a short-term decline, you can use BTC as margin to open a short position as a hedge.
Miners. Miners continuously receive BTC output and can use BTC as margin to short and lock in mining revenue.
Strong conviction in a coin's long-term value. If you firmly believe in BTC's long-term value, coin-margined contracts let all your profits accumulate in BTC.
Which Should Beginners Choose
Without a doubt, choose USDT-margined. Here's why:
First, USDT-margined P&L is more intuitive. With USDT-denominated gains and losses, you can instantly see how much you've earned or lost.
Second, margin value is stable. USDT won't fluctuate wildly like BTC, so you don't have to worry about your margin depreciating.
Third, better liquidity. USDT-margined contracts have higher trading volume, deeper order books, and lower slippage.
Fourth, more trading pairs. You can trade hundreds of cryptocurrency contracts using the same USDT margin.
Fifth, lower barrier to entry. You only need to hold USDT to start trading — no need to buy various cryptocurrencies first.
Only when you're a long-term holder, miner, or have specific hedging needs should you consider coin-margined contracts.
Fee Comparison
USDT-margined and coin-margined contracts have essentially the same fee structure:
| Fee Type | USDT-Margined | Coin-Margined |
|---|---|---|
| Maker Fee | 0.02% | 0.01% |
| Taker Fee | 0.05% | 0.05% |
As you can see, coin-margined contracts have a lower Maker fee (0.01% vs 0.02%). If you primarily use limit orders, coin-margined contracts have a slight fee advantage. But considering liquidity, operational convenience, and other factors, this fee difference is usually not decisive.
How to Switch Between USDT-Margined and Coin-Margined on Binance
On the Binance App's futures trading page:
Step 1: Tap the contract type switcher at the top of the page.
Step 2: Select "USDT-Margined" or "Coin-Margined."
Step 3: If you select coin-margined, ensure your coin-margined futures account has sufficient corresponding cryptocurrency for margin.
Fund transfer: Coin-margined contracts use a separate "Coin-Margined Futures Account." You need to transfer BTC or ETH from your spot account to the coin-margined futures account to use them.
Transfer path: Assets > Transfer > From Spot Account to Coin-Margined Futures Account.
Strategies Using Both Contract Types
Some experienced traders use both contract types simultaneously to achieve specific strategic goals:
For example, if you hold BTC long-term and are bullish on its long-term trend, you can:
Use BTC on coin-margined contracts for short-term trades, earning extra returns from your holdings.
Simultaneously use USDT-margined contracts to trade other coins, diversifying your income sources.
When you sense the market is about to drop significantly, open short positions on coin-margined contracts to hedge your spot BTC holdings.
These strategies require considerable trading experience, and beginners should not attempt them. Start with USDT-margined contracts, build a solid foundation in futures trading, and gain sufficient experience before considering more complex strategies.