Recently, Rollu.Finance, a decentralized derivatives trading platform based on zkSync, announced the launch of RUSD contract trading mode, which is a U-based contract trading. According to its white paper, the RUSD contract trading mode supports perpetual contract trading and leverage trading of diversified assets, including cryptocurrencies, cryptocurrency exchange rates, foreign exchange, gold, silver, etc. Among them, a new concept - cryptocurrency exchange rates - is particularly eye-catching.

For most advanced users of contract trading, the term "exchange rate contract" may be unfamiliar. In fact, it is a contract trading that uses the exchange rate of two tokens as the trading target. Rollup.Finance is the world's first derivative trading platform to launch exchange rate contract trading. For traders seeking to reduce risk and achieve long-term profitability, this innovation in trading targets provides a unique trading opportunity. In this article, we will delve into the definition and characteristics of exchange rate contracts, and why they may be an ideal choice.

1. Definition of Exchange Rate Contract

Exchange rate contract is a financial contract whose trading target is the cross exchange rate of two different tokens. This contract allows investors to profit by going long (bullish) or short (bearish) on the exchange rate, and its profit and contract trading formula are the same.

Long position: PnL = (Latest price - Entry price) / Entry price * Position sizeEmpty position: PnL = (entry price - current price) / entry price * position size.

This simple formula allows traders to profit based on their view of token price dynamics. If a trader believes that the exchange rate between two tokens will rise, they can choose to go long on the cryptocurrency exchange rate, and vice versa. This trading method provides investors with more choices and opportunities.

Not only that, if an investor believes that Ethereum (ETH) will outperform Bitcoin (BTC), they can choose to go long on the ETH/BTC exchange rate contract to realize profits. Conversely, if they predict that BTC will lead ETH, they can choose to go short on the ETH/BTC exchange rate contract.

二、汇率合约的特点

translates to

2. Characteristics of Exchange Rate Contracts

in English.

The exchange rate contract has some unique characteristics compared to other trading instruments, making it an attractive choice.

可预测性

Predictability

Exchange rate contracts usually exhibit a certain degree of predictability. For example, taking the ETH/BTC exchange rate as an example, this ratio may show a trend of regression over a period of time. This predictability allows investors to better plan their trading strategies. The trend of the three exchange rate contract K-lines in the following figure clearly demonstrates their mean reversion characteristics.

(Data Source: Binance Data)

Low risk

Compared to contract trading with a single token, the risk of exchange rate contracts is usually smaller. This is because they are based on the relative value of two tokens, rather than the price fluctuations of a single token. The following chart shows the risk levels of BTC, ETH, and ETH during the same period (Var value -75%). In the long run, the risk coefficient of exchange rate contract trading is smaller.  

(Data Source: Binance Data)

Stable Returns

Compared to traditional trading pairs, exchange rate contracts typically exhibit more stable returns. This is because they allow investors to establish long or short positions on exchange rates between different tokens to achieve returns, without being limited by the price fluctuations of a single token. This gives users more flexible choices, such as being able to short XRP while going long on BTC, and therefore being able to choose to trade XRP/BTC.

Long holding period

Although the exchange rate contract risk is relatively small, they usually require a longer holding period to achieve significant profits. This is because price changes are relatively small, and investors need to wait longer to accumulate returns. However, investors can improve capital efficiency by expanding leverage. Rollup.Finance provides up to 100X leverage, allowing users to manage funds more flexibly.

Three, How to Conduct Currency Futures Trading

As the world's first trading platform to support exchange rate contracts, Rollup.Finance currently offers ETH/BTC, XRP/BTC, XRP/ETH, and LINK/BTC exchange rate contract trading pairs in the RUSD contract, with a maximum leverage of 100X. Rollup.Finance officials have stated that more exchange rate contract trading varieties will be launched in the future.

About Rollup.Finance

Rollup.Finance is a decentralized derivatives trading platform launched on zkSync, providing a solution for perpetual contract trading on Layer 2 chains. It creates a new model for on-chain contract trading and brings sustainable real returns to users.

- Official website: https://rollup.finance

- Docs/Whitepaper: https://docs.rollup.finance

- Twitter: https://twitter.com/Rollup_Finance

- Discord: https://discord.com/invite/WUSKams3Un

- Telegram: https://t.me/rollupfinance 

Disclaimer:

●Information Accuracy: This article is for reference and information transmission only. We strive to ensure the accuracy and completeness of the information provided, but do not provide express or implied guarantees of its accuracy or completeness. Readers should verify and verify the information provided on their own.

●Investment Risk: Exchange rate contracts and other cryptocurrency transactions involve high risks. The cryptocurrency market is highly volatile and may result in losses. Before engaging in any transactions, readers should understand and be aware of the relevant risks and act within their own risk tolerance.

●Professional advice: The information in this article does not constitute financial, legal, or investment advice. Readers should seek professional consultation to determine their specific circumstances and goals.

●Compliance: Cryptocurrency and contract trading are subject to the laws and regulations of different countries and regions. Readers should comply with local laws and regulations and ensure that they are qualified to engage in relevant transactions.

Welcome to join the official BlockBeats community:

Telegram Subscription Group: https://t.me/theblockbeats

Telegram Discussion Group: https://t.me/BlockBeats_App

Official Twitter Account: https://twitter.com/BlockBeatsAsia