Frequently Asked Questions (FAQs)

FAQs

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Perpetuals

Comprehensive information on trading perpetuals contracts, funding rates, and margin account management.

Perpetuals contracts are derivative instruments that allow traders to hedge and speculate on the price movements of crypto assets without owning the underlying asset. They have no expiry date and usually mimic the price of the underlying cryptocurrency through a funding rate mechanism, based on the contract's premium or discount to the spot price.

Perpetuals contracts use a funding rate mechanism to ensure the contract price closely tracks the spot price of the underlying cryptocurrency. The funding rate mechanism involves periodic payments made to either long or short traders per market based on the difference between the perpetuals contract price and the mark price of the underlying crypto asset.

If the funding rate is positive, traders with open long positions pay a funding fee to traders with open short positions. If the funding rate is negative, traders with open short positions pay a funding fee to traders with open long positions. These funding fees encourage the contract price to converge with the spot price.

Perpetuals contracts offer several benefits, including high liquidity, leverage, 24/7 trading availability, and the ability to profit from both rising and falling markets. Perpetuals contracts also allow traders to hedge their existing positions, engage in arbitrage strategies, and trade the crypto assets without the need for spot ownership.

Perpetuals contracts do not have a fixed settlement date. Instead, they remain open indefinitely until the trader decides to close their position. Profits and losses are realized when the position is closed, with the difference between the entry and exit prices determining profit or loss, net of any fees.

Perpetuals contracts may have a liquidation price, beyond which liquidation may occur. If the mark price reaches the liquidation price, the contract may be automatically closed to protect the trader and the exchange from potential losses. Liquidation ensures that traders' margin requirements are met and helps maintain the stability of the market.

Enclave supports the following assets: BTCUSD, ETHUSD, AVAXUSD, SOLUSD, MEMESUSD. Market listings will be updated periodically.

Maximum leverage for each market is as follows:

BTCUSD: 10x

ETHUSD: 10x

AVAXUSD: 10x

SOLUSD: 10x

MEMESUSD: 5x

Enclave offers up to 10x leverage. Maximum leverage varies by market as follows:

BTCUSD: 10x

ETHUSD: 10x

AVAXUSD: 10x

SOLUSD: 10x

MEMESUSD: 5x

Market Order: Order executes immediately at best possible execution price on the existing order book
Limit Order: Order executes at the selected limit price or better
Take Profit/Stop Loss (TP/SL) Orders: Take Profit/Stop Loss orders are used to lock in profits and/or prevent losses. Take Profit and Stop Loss orders can be added to a position after a position has been created. Take Profit and Stop Loss lock in profit or limit losses by triggering market orders once the mark price reaches the specified order price.

The purpose of the funding rate is to keep the price of a perpetuals market in line with the underlying asset’s mark price.

The funding rate calculates periodic payments made to either long or short traders per market based on the difference between the perpetuals contract price and the mark price of the underlying crypto asset.

If a perpetuals market has more buyers than sellers, the perpetuals contract price will be higher than the asset’s mark price. When this happens, traders with long positions pay a funding fee to traders with short positions. This funding fee incentivizes more short positions and fewer long positions in order to bring the the contract price down to the mark price.

If a perpetuals market has more sellers than buyers, the perpetuals contract price will be lower than the asset’s mark price. In this case, traders with short positions pay traders with long positions. This incentivizes more long positions and fewer short positions in order to bring the the contract price up to the mark price.

Funding rates are paid near the top of every hour.

Net funding is the total funding earned or paid for the lifetime of your current position. Net funding resets if a position is closed or if leverage switches from short to long or vice versa.

Margin equity is the total value of your Enclave Margin account, including your Enclave Margin Wallet balance and unrealized PnL.

Margin ratio is calculated as maintenance margin divided by margin balance. If your margin ratio reaches 100% some or all of your positions will be liquidated.

Margin ratio measures your usage of margin for your account. It is calculated as the lowest amount of margin necessary to avoid liquidation divided by your current margin balance. When your margin ratio reaches 100% your account is fully leveraged and some, if not all, of your positions will be liquidated.

Maintenance margin is the lowest amount of margin equity required to avoid liquidation. If your margin equity drops below the maintenance margin, your positions will be liquidated by the exchange.

Unrealized P&L (uP&L) is the profit or loss estimate that would become realized if a position were closed.

uP&L is calculated as the difference between the position’s mark price and average entry price multiplied by the net position quantity.

The liquidation price is an estimate of the mark price that will trigger a liquidation.

This is only an estimate and can be impacted by a number of variables as market prices change.

Mark price is the estimated fair value of the underlying asset, based on prices from multiple spot exchanges.

This is used for calculations of funding fees, margin equity, and liquidations.