I. Brief Introduction of Hotbit’s Perpetual Contract Trading Function

Hotbit’s perpetual contract trading function is known as the new trading function of virtual contract products settled in various cryptocurrency tokens such as BTC launched by Hotbit. Each contract of Hotbit’s perpetual contract trading product represents USD$ 100 worth of BTC. The investors may obtain incomes generated from the rise or fall of the price(s) of cryptocurrency by either purchasing long contract(s) or sell short contract(s). The available leverage ratio is 1~100 times.

Perpetual Contract

- Maturity Date：

A delivery date applies to each contract (fixed term contract). By the delivery date, the system will close the positions of all weekly contracts with opened positions and then conduct settlement and delivery on these contracts, the settlement price of each contract will be determined by the arithmetic mean of the US Dollar Index of BTC (or other token types such as LTC) within the previous hour. The delivery date does not apply to perpetual contracts.

- Funding Rate：

Considering the fact that perpetual contracts do not involve a delivery date, Hotbit adopts a “funding rate mechanism” for all perpetual contracts, which allows the price of the contracts to be pegged with the price of spot trading.

- Mark Price：

The unrealized gains and losses of perpetual contracts’ users are calculated by mark price, which effectively reduces the frequency of unnecessary forced liquidations during market fluctuations.

- Settled every 24 hours

The contracts are settled every 24 hours (at 08:00 UTC everyday)

- The Mechanism of Tiered Rate of Maintenance Margins

The rate of maintenance margins refers to the lowest rate of margins required for the user to maintain his / her current positions. In case that the rate of margins is lower than the rate of maintenance margins + the transaction fee of closing the positions, a forced liquidation or forced reduction of partial positions will be triggered. Hotbit adopts the mechanism of tiered rate of maintenance margins for users who hold different levels of positions, which means that the greater volume of positions the user holds, the higher the user’s rate of maintenance margins will be, and the lower maximum leverage ratio will be available for the user.

- Forced Partial Closing of Positions：

For the users who hold a comparatively high volumes of positions and can be categorized as level 2 or above according to the volumes of positions they hold, when their rates of margins are lower than their current rates of maintenance margins+their current transaction fees of closing their positions but still higher than the lowest rates of maintenance margins + transaction fees of closing positions, the system will not conduct a forced liquidation on all of those users’ positions. Instead, the system will calculate the volumes of positions to be reduced from those users’ accounts according to the standard of one level lower than the users’ current levels and close part of the users’ positions accordingly. After that, if the users’ rates of margins meet the standard of the rates of the maintenance margins required by the new level, the closing of positions will be terminated; if the users’ rates of margins still don’t meet the standard of the rates of the maintenance margins required by the new level, then the process of closing the positions will be continued over and over again as mentioned above. Under the model of isolated margin, during the process of forced partial closing of positions, the users’ relvant positions will be frozen, and users will not be able to conduct relevant operations. Under the model of cross margin, during the process of forced partial closing of positions, the users’ relevant contract trading accounts of the certain token types will be frozen, and the users will not be able to conduct relevant operations.

Essentials of The Contracts

The trading periods of all token-standard perpetual contracts are 7*24 hours, with all contracts to be settled at 08:00 everyday (UTC). All contracts will be settled in the corresponding token types of the contracts, and the unit of price quote will be the price of 1 unit of the product in corresponding token types.

Contract	Underlying	Face Value	Tick Size	Leverage
BTCUSD Perpetual	BTC/USD	100 USD	0.1	1-100X
ETHUSD Perpetual	ETH/USD	10 USD	0.01	1-50X

Rates of Transaction Fees of The Contract

Rate of Taker’s Transaction Fee	0.0002
Rate of Maker’s Transaction Fee	0.0002