Lesson 0 of 1Understanding Trading Risks1 min read

Understanding Perpetual Contracts That Track Traditional Assets

This guide introduces the basic structure of TradFi perpetual contracts and uses contracts related to POPMART, TMF, TBT, and BITO to explain differences among underlying assets, margin mechanisms, and major risks. The content is for foundational learning only and does not constitute trading advice.

Perpetual Contracts and Traditional Asset Exposure

TradFi perpetual contracts have no expiration date, and their prices track traditional assets such as stocks, ETFs, commodities, or indices. Traders gain price exposure but do not actually own shares of a stock or ETF, nor do they receive dividends or shareholder rights. These contracts use USDT as the margin and settlement unit, while funding rates help keep contract prices close to the underlying asset prices.

What the Four Contracts Track

POPMARTUSDT tracks the share price of Hong Kong-listed Pop Mart; TMFUSDT tracks an ETF seeking triple the daily long exposure to a long-term U.S. Treasury index; TBTUSDT tracks an ETF seeking double the inverse daily performance of long-term U.S. Treasuries; and BITOUSDT tracks BITO, which primarily holds CME Bitcoin futures rather than directly tracking or holding spot Bitcoin.

Margin, Leverage, and Funding Rates

The four contracts in the source support up to 25 times leverage and settle funding fees every eight hours. When the contract price is above the underlying spot price, long positions generally pay short positions; when it is below the spot price, the reverse applies. Cross margin mode makes assets and positions across the account share risk, while isolated margin mode limits risk to a single position, but neither eliminates liquidation risk.

Key Risks to Understand

TMF and TBT reset their leverage daily, and compounding and volatility decay can cause long-term results to diverge from simple multiples. BITO is also affected by futures basis and rollover costs. When traditional markets are closed while perpetual contracts continue trading, prices may gap when those markets reopen. Combined with high leverage, even a small adverse move can result in substantial losses or liquidation.

Original Tutorial

https://www.binance.com/zh-CN/academy/articles/how-to-trade-popmart-tmf-tbt-and-bito-on-binance-futures

Mark it complete when you understand it.

REFERENCE

Related terms

Key concepts used in this lesson.

TradFi perpetual contracts
Tracking stocks,ETF commodities or indices, and other traditional financial assets, but without conferring ownership of the underlying assets, are perpetual contracts.
Price gap
The phenomenon in which an asset’s price adjusts discontinuously when traditional markets reopen to reflect changes that occurred during the closure.
Cross margin mode
A mode that considers the assets and multiple positions in a derivatives account together when calculating margin and liquidation risk.
Rollover cost
The cost that may arise when replacing an expiring futures contract with a new contract, which may erode the returns of products using futures strategies over the long term.
Perpetual Contract
A derivative contract with no expiration date, designed for continuous holding, whose funding rate mechanism helps keep its price close to that of the underlying asset.
Volatility decay
Leveraged or inverse ETF A phenomenon in which daily resets and compounding effects may cause long-term returns in volatile markets to gradually deviate from the expected multiple.