After BitMex went live with its Bitcoin perpetual futures in 2016, it set up a fresh paradigm for traders of digital coins. This was not the first place that Bitcoin inverse swaps were available, but BitMex provided the liquidity and stability that a broad audience of investors wanted. Its contracts did not require fiat currencies or stable coins, but the reference price was calculated using the United States dollar. All of the platform's profits and losses were paid for in Bitcoin.

In 2021, Tether is a settled contract that has gained a lot of relevance. It uses contracts based on the United States dollar. This makes it easier for investors to figure out their margins. There are also some disadvantages, which include complexity and a requirement for both the seller and the buyer to contribute Bitcoin to the margin.

When contracts involve trading coins with a margin, the parties don't have to use stable coins. There is less collateral risk. An algorithm stabilizes the problems. If fiat-based transactions were performed, there is a risk of government seizure and control. By trading with Bitcoin, participants eliminate that risk. It's also important to know that if the price of Bitcoin drops, so does a person's collateral.

This drop of collateral is called a non-linear inverse future return. The buyer has to deal with more losses if the price of Bitcoin drops. The differences increase the more the reference price drops from its initial position. When contracts on futures are tied to the United States dollar, they are easier to manage. Returns are linear and unaffected by a big drop or big increase in Bitcoin's price. There are still some costs involved. No hedge is needed, so it's a better deal for a retail trader.

Participants should know that long-term positions on a stable coin have an inherent risk. That increases if some kind of custodial service is used. Some users get more than 11% annual percentage yield on their stable coin deposits because of that risk. When an investor gets returns in Bitcoin or fiat, futures are getting a lot of attention.