Sei Network (SEI), a Layer 1 blockchain with a built-in central limit order book, is now tradable via a new USDT-margined linear futures contract—SEIUSDTQ23. This contract offers traders exposure to SEI with leverage of up to 20x.
Understanding Sei Network and the SEI Token
Sei Network is a Layer 1 blockchain optimized for decentralized finance (DeFi), non-fungible tokens (NFTs), and gaming applications. It boasts a transaction throughput of up to 20,000 orders per second and a transaction finality time of just 500 milliseconds. The network aims to support high-frequency trading at off-chain speeds without compromising on-chain security.
The native token, SEI, plays a central role in the ecosystem, facilitating transactions, staking, and governance.
Key Features of the SEIUSDTQ23 Futures Contract
The SEIUSDTQ23 is a linear futures contract margined in USDT (ERC-20). While it functions similarly to standard futures contracts, several key distinctions apply.
Contract Specifications
- Ticker Symbol: SEIUSDTQ23
- Expiration Date: August 25, 2023
- Margin Currency: USDT
- Contract Size: 1 SEI
- Lot Size: 10
- Minimum Trade Amount: 10 SEI
- Underlying Index: .BSEIT
- Maximum Leverage: 20x
- Maker Fee: 0.00%
- Taker Fee: 0.075%
- Initial Margin: 5.00%
- Maintenance Margin: 2.50%
Important Structural Differences
This listing is notably speculative and volatile. Consequently, several mechanisms are in place to manage risk:
- Mark Price Method: The Last Price is used for marking, as an observable market price for SEI is not yet widely established.
- Price Limits: Circuit breakers are set at ±20% from the mark price every hour. Traders cannot place bids above the upper limit or offers below the lower limit.
- Settlement Price: The contract will settle based on the .BSEIT30M index. BitMEX will construct a robust .BSEIT index representing the SEI token's spot price when feasible. If no such index is established before expiry, the settlement value will be zero.
- Auto-Deleveraging (ADL): As with all crypto derivative contracts on the platform, auto-deleveraging is enabled. Given the speculative nature of this contract, the probability of ADL occurring is higher than average.
Traders should thoroughly understand these unique features before participating. 👉 Explore more trading strategies
Trading Volatile Crypto Derivatives
Engaging with new and volatile contracts requires a disciplined approach. Here are some general best practices:
- Start Small: Begin with a smaller position size to understand the contract's behavior.
- Use Risk Management Tools: Employ stop-loss orders and carefully monitor your margin levels.
- Stay Informed: Keep abreast of project developments and overall market conditions that could impact volatility.
- Understand the Mechanics: Be fully aware of unique contract specifications, like price limits and settlement conditions.
Frequently Asked Questions
What is a USDT-margined linear futures contract?
A linear futures contract is settled in the same stablecoin used for margin—in this case, USDT. This simplifies calculations for traders, as profit and loss are directly measured in USDT, a stable value currency, unlike inverse contracts which are settled in the underlying cryptocurrency.
Why does this SEI contract have unique price limits and marking?
Due to the nascent and speculative nature of the SEI token at launch, these mechanisms are critical risk management tools. They help protect the market and participants from extreme volatility and potential price manipulation before a robust and reliable market price is established.
What happens if the .BSEIT index is not created before the contract expires?
As per the contract specifications, if a representative index for the SEI token's spot price is not built by BitMEX before the expiration date on August 25, 2023, the settlement value for the contract will be zero. Traders must be cognizant of this possibility.
How does maximum leverage work?
The 20x maximum leverage means traders can open a position worth up to 20 times their initial margin. For example, a 100 USDT margin could control a 2,000 USDT position. While leverage amplifies potential gains, it also significantly increases the risk of liquidation if the market moves against the position.
Is this contract available to all BitMEX users?
The contract is available to users on the platform. However, all traders should check their local regulations to ensure trading such derivatives is permitted in their region before engaging.
What is auto-deleveraging (ADL) and why is the risk higher here?
Auto-deleveraging is a process where profitable positions are gradually reduced to cover the losses of traders who have been liquidated but whose positions could not be closed at the bankruptcy price. In highly speculative and potentially illiquid markets, the likelihood of this occurring increases.