Contract Specifications

Overview

Bulk Exchange offers perpetual contracts, which are derivative products without an expiration date. To ensure the contract's price remains aligned with the underlying asset's spot price, a funding mechanism is utilized. You can find more details on this in the "Funding Mechanism" section.

All contracts on Bulk Exchange are margined using USDC. This means that while the profit and loss (PnL) may be denominated in the value of the underlying asset, the actual collateral held and settled is in USDC. This approach provides a streamlined and robust collateral system.

Margin System

Bulk Exchange employs a sophisticated margin system to manage risk, supporting both Cross and Isolated margin modes on a per-position basis.

• Initial Margin (IM): This is the amount of collateral required to open a new position or increase the size of an existing one. The calculation is straightforward: Initial Margin = (Position Size * Price) / LeverageBefore any order is accepted, the system runs a check_order_margin function to ensure the user has sufficient available collateral to meet the new requirement.

• Maintenance Margin (MM): This is the minimum amount of collateral required to keep a position open. Falling below this level will trigger liquidation. Bulk Exchange uses a tiered system for Maintenance Margin based on the notional value of the position to account for the increased risk of larger positions.

  • Example Tiers:

    • Position Value < $250,000: MM rate = 0.5%

    • Position Value > $250,000: MM rate = 1.0%

Key Parameters

Instrument Type	Perpetual Contract
Contract Size	The quantity of contracts held. Positive for long, negative for short. Scaled by 10^4.
Underlying Asset	The fair value is determined by a robust Mark Price model.
Initial Margin Fraction	1 / Leverage (Set by the user on a per-position basis)
Maintenance Margin Fraction	Based on a tiered system according to the position's notional value.
Mark Price	A median of three components: Adjusted Oracle Price, Local Order Book Median, and a Smoothed Local Price. See the "Mark Price" documentation for a detailed explanation.
Delivery / Expiration	Not applicable. Funding payments are exchanged hourly to anchor the contract price.
Position Sizing	No explicit position limits are stated, but Maintenance Margin requirements increase with position size.
Account Type	Per-wallet Cross or Isolated margin options are available for each position.
Liquidation Thresholds	A two-tiered liquidation strategy is employed to minimize market impact. For positions with a notional value exceeding $100,000, only a partial liquidation (20% of the position) is executed initially.