# XBTUSD Listed Perpetual

XBTUSD is a Xena Listed Perpetual over the price of Bitcoin to USD. This article outlines the mechanics of the perpetual, the full contract specification is published on the Xena Exchange website here: https://xena.exchange/perpetuals/XBTUSD.

# Trading XBTUSD

The value of each contract is $1. The contract is traded in lots, each lot is 100'000 contracts. The minimal order quantity is 0.01 lots, i.e. $1'000. Given the minimal initial margin requirement of 5% (maximal leverage is 20x), the balance of your account must be greater than equivalent of $50 to open a minimal trade.

# Underlying index

.BTC3_TWAP index is used as the underlying. The index is calculated is follows:

- .BTC3 index is calculated as average price of Bitcoin to USD(T) on three exchanges:
- Bitstamp
- CoinBase Pro
- Kraken

- The value of .BTC3_TWAP is the average of last 30 values of the .BTC3 index

# Premium index

Premium payments are calculated based on the .XBTUSD_Premium_IR_Corrected index. The index is calculated as follows:

- The volume-weighted average price to execute a market buy order with 0.1 BTC initial margin is calculated using the asks in the XBTUSD order book (.XBTUSD_Asks)
- The volume-weighted average price to execute a market sell order with 0.1 BTC initial margin is calculated using the bids in the XBTUSD order book (.XBTUSD_Bids)
- The mid price is calculated as average of the .XBTUSD_Asks and .XBTUSD_Bids values
- The relative difference between the mid price and the value of .BTC3_TWAP index is calculated: Percentage_Hourly = (Mid Price - .BTC3_TWAP) / .BTC3_TWAP and averaged over last 5 minutes
- The averaged relative difference is annualised: .XBTUSD_Premium_IR = Percentage_Hourly * 24 (clearings per day) * 365 (days per year)
- The threshold is applied: .XBTUSD_Premium_IR_Corrected = if abs(.XBTUSD_Premium_IR) < 2.5% * 24 * 365 then 0 else .XBTUSD_Premium_IR

The actual premium payment is calculated as (.XBTUSD_Premium_IR_Corrected as of clearing) * (Position Value in BTC as of clearing) / (24 * 365). If the index value is positive, long positions pay to short positions; if it's negative, shorts pay longs.

The simpler explanation is: if the relative difference between the mid price and the underlying index value is less than 2.5%, no premium will be paid or received. If it's greater, than the premium payment size is equal to the difference between the mid price and the underlying index (in USD) for each 1 BTC in the position value.

## Examples

- .BTC3_TWAP price is 3500, Mid price is 3600 (Perpetual is traded above the actual BTC price), John holds a long position of 0.35 lots, and Jane holds a short position of 0.35 lots:
- Current position value in BTC is 0.35 lots * 100'000 contracts per lot * $1 (value of each contract) / 3500 = 10 BTC
- John will pay $100 * 10 = $1000 to Jane

- .BTC3_TWAP price is 3500, Mid price is 3400 (Perpetual is traded below the actual BTC price), John holds a long position of 0.35 lots, and Jane holds a short position of 0.35 lots:
- Current position value in BTC is 10 BTC
- Jane will pay $100 * 10 = $1000 to John

- .BTC3_TWAP price is 3500 and the mid price is between (3500 - 2.5%) = 3412.5 and (3500 + 2.5%) = 3587.5: John and Jane neither pay nor receive the Premium