Classification of Contract Types

Announcements Classification of Contract Types

2022-03-24 04:10:42 UTC 136416 Read

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## The currency types in the futures tradings are specified in the following three types:

1. Base Currency: The underlying currency of the trading
2. Quote Currency: The currency is a counter currency
3. Settle Currency: The currency is used for settlement;

According to different combinations of currency types, contract types can be divided into three types: USDT Contract, Quanto, and Inverse Contract.

## USDT Contract
A contract with the same quote currency and settlement currency. It's the easiest one with all contract types, with the same concept as spot trading, which is also the easiest to understand. Take ETC-USDT contract as an example, ETC is the base currency, while USDT is for pricing and settlement. The price is the number of 1 ETC worth of USDT. ( Currently, all contracts settled with USDT is USDT contract)

## Quanto Contract
Quanto Contract is settled as another asset rather than either the base currency or the counter currency in the trading pair. Since the counter currency and the settlement currency are different, it's necessary to define a trading relationship between them. Take ETC-USDT contract as an example, ETH is base currency, USDT is the counter currency, and BTC is used for settlement. Quanto realizes that some users are not willing to maintain a certain base currency wallet (such as ETH) but trade with the currency in their wallet (settlement currency, BTC), and use the most familiar fiat currency (counter currency, USD) to mark price. ( Currently, most contracts settled with BTC are Quanto Contract)

## Inverse Contract
A contract with the same base currency and settlement currency is an Inverse Contract. For example, BTC_USD. It's possible to trade with the currency in the wallet (BTC) without maintaining fiat currency (USD) by applying the Inverse Contrat. That the trading relationship between USD and BTC is reversed, and USD is still used to mark the price.

**Note: You can view the contract type on the [Contract Details](https://www.gate.io/futures_info_new/futures/btc/BTC_USD#baseinfo "Contract Details") page.**

![](https://gimg2.gateimg.com/image/article/16714200521671419852265.jpg)

Currently, Gate.io supports multiple Direct and Quanto contracts, with a maximum leverage of 100 times. You can choose the corresponding contract type, market and leverage according to your assets and investment preferences, and transfer the corresponding currency as margin to participate in futures trading.

## Which Contract Type is Suitable For Me?
If you are a beginner and only hold stable coins, the direct contract will be more friendly. You only need to hold USDT to participate in the futures trading. Since the value of USDT is relatively stable, the profit and loss will also be more intuitively reflected.

If you already have futures trading experience, holding BTC, ETH or other digital currencies in your hands. You can enter the market with inverse contracts or quanto contracts. In the case of rising market conditions, the corresponding currency value you earned will also increase;In contrast, potential losses are also magnified.

Before participating in the market, please make sure that you have fully understood the characteristics and risks of futures trading!

Gate.io reserves the final right to interpret the product.

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