Futures

Overview

LNM Futures is a derivative perpetual futures contract whose underlying asset is a weighted basket of BTCUSD perpetual futures from multiple exchanges, such as Bybit, Binance, OKX, Deribit or BitMEX.

It is designed to capture the performance of various BTC/USD perpetual contracts across different exchanges or platforms.

Key Characteristics

Diversification of Exchange Risk: This construction helps mitigate the risks associated with any single exchange. If a particular exchange experiences disruptions, LNM Futures would still be exposed to the performance of BTC/USD on other exchanges.

Reduced Impact of Funding Rates: Since perpetual futures have a funding rate to anchor the price to spot, by aggregating across multiple exchanges, the impact of any single exchange's funding rate anomalies is reduced.

Market Liquidity: By aggregating liquidity from multiple venues, LNM Futures offers deep liquidity through a single platform.

Price Reference

The BTCUSD Basket Last Price is a weighted average of last traded prices from BTC/USD perpetual futures across selected exchanges. It is used for calculating profit and loss (P&L).

Order execution (including liquidation, take profit, and stop loss triggers) uses the order book buckets, not the price reference.

The current basket composition is as follows:

Loading exchange weights...

This composition may be modified without prior notice.

Contract Specification

Leverage

Leverage allows you to open positions larger than your margin. Higher leverage means higher potential returns but also higher risk.

Margin Modes

1. Isolated Margin

Each trade has its own margin. Liquidation only affects that position.

• Margin is locked per trade
• Add or remove margin on open positions
• Risk is isolated to individual trades
• Best for managing risk on individual positions

2. Cross Margin

All positions share a common margin pool.

• Unrealized PnL offsets across positions
• More capital efficient
• Single liquidation price for entire account
• Best for active traders managing multiple positions

Trade Margin

The margin is the collateral you put up to open a position. It is calculated as:

margin = (quantity / price) × (1 / leverage) × 100,000,000

Maintenance Margin

The minimum margin required to keep a position open.

Trading Fee

Trading fees are tier-based, decreasing as your trading volume increases.

Your tier is based on your 30-day cumulative volume. Check your Profile to view your current Tier.

Trading fee calculation process

1. Initial Setup:

   • Total fee paid = 0
   • Maintenance margin = Opening fee reserved + Closing fee reserved
   • Opening fee reserved = (Quantity / Entry price) × Tier fee
   • Closing fee reserved = (Quantity / Initial liquidation price) × Tier fee

2. At Position Opening:

   • Total fee paid = Opening fee
   • Maintenance margin = Opening fee reserved + Closing fee reserved - Opening fee
   • (Opening fee reserved and opening fee can be different in case of change of tier fee)

3. At Position Closing:

   • Total fee paid = Opening fee + Closing fee
   • Maintenance margin = 0

Example:

For a long position with:

• Quantity: $60
• Trade margin: 10,000 sats
• Leverage: 10x
• Entry price: $60,000
• Initial liquidation price: $54,545

Calculation:

• Opening fee reserved = 100,000,000 × (60/60,000) × 0.1% = 100 sats
• Closing fee reserved = 100,000,000 × (60/54,545) × 0.1% = 110 sats
• At the time of trading, if there is no change of tier fee, total fee paid = 100 sats and maintenance margin = 100 + 110 - 100 = 110 sats
• When closing the position, if there is no change of tier fee, total fee paid = 100 + 110 = 210 sats and maintenance margin = 0

Funding Fee

Funding fees in perpetual futures maintain the price of the perpetual contract close to the price of the underlying asset (spot price). The funding rate calculation is an aggregation of individual rates determined using the same methodology employed to construct the price.

Funding fee calculation process

Funding fees are payments exchanged between traders holding long and short positions.

When funding rates are positive:

• Long positions pay the fee
• Short positions receive the fee

When funding rates are negative:

• Long positions receive the fee
• Short positions pay the fee

This mechanism helps maintain price alignment between the futures contract and the spot market. A positive funding rate suggests bullish market conditions, while a negative funding rate suggests bearish conditions.

Funding fees are:

• Updated every 8 hours (00:00, 08:00, 16:00 UTC)
• Applied only to running positions
• Deducted from the position margin for paid funding fee
• Added to your balance for received funding fee
• Visible in the Funding section of your wallet

Example (positive rate +0.01%):

Long position:

• Quantity: $10,000
• BTCUSD rate: $60,000
• Funding fee paid = (10,000/60,000) × 0.01% × 100,000,000 = 1,667 sats

Short position:

• Quantity: $10,000
• BTCUSD rate: $60,000
• Funding fee received = 1,667 sats

Example (negative rate -0.01%):

Long position receives 1,667 sats, short position pays 1,667 sats.

Add Margin

You can add margin to your running positions at any time by clicking the "+" button in the Actions section of the Running Positions blotter. This action will reduce the leverage of your running position, thereby decreasing the likelihood of a liquidation event.

Effects of Adding Margin:

When adding margin:

• Leverage decreases (reduces liquidation risk)
• Liquidation moves further from current price
• Account balance decreases by the added amount

Cash In

You can cash in from your running positions at any time by clicking the "-" button in the Actions section of the Running Positions blotter.

When you cash in, funds are first deducted from the trade's profit and loss (P&L), if applicable, and then from the trade's margin. Please note that cashing in increases the trade's leverage; therefore, not all of the margin will be available, as leverage is subject to limits.

Effects of Cashing In:

When cashing in from positive P&L:

• Entry Price changes
• P&L decreases

When cashing in from margin:

• Liquidation moves closer to current price
• Leverage increases

In both cases, account balance increases by the removed amount.

Order Types

Limit orders and take profit orders are executed subject to available liquidity at the specified price.

Liquidation

Positions are liquidated when margin falls below maintenance requirement. The liquidation price is calculated based on your entry price, leverage, and side.

Set stop-loss orders to manage risk and avoid liquidation.

Market Liquidity

Order execution uses the order book, which determines available liquidity at each price level. The volume ladder visualizes this order book in real time, showing how much can be bought or sold at different prices.

Liquidity fluctuates with market conditions. Larger orders may execute at less favorable prices as they consume multiple price levels in the order book.

All trading events—including entry, exit, liquidation, take profit, and stop loss—execute against the order book, not the price reference.

⚙️ Liquidation example: A trader holds a long position worth $150,000 with liquidation level at 92,000. The price reference shows 92,030, but the volume ladder shows the best bid for $150,000 is at 92,010.

If liquidity shifts and the bid for this quantity drops below 92,000, the position liquidates—even though the price reference remains above 92,000. The order book price, not the price reference, triggers liquidation.

Glossary