What is Hedging?
Hedging, also known as hedging transaction, refers to the trading activities in which traders use futures trading to temporarily replace real product transactions, thus insuring future selling or buying price of products. In this case, hedging effectively helps traders avoid or reduce losses caused by adverse price changes.
ViaBTC Hedging Service is tailored for miners to hedge exposure and guarantee earnings in advance. Miners predict mining output for a period of time, borrow coins through this service and sell them at the current market price in advance to lock in long-term mining revenue. Compared to other hedging services in the traditional financial market, ViaBTC Hedging Service meets more demands from miners with higher practicability.
Advantages of ViaBTC Hedging Service
1. More matchable: ViaBTC Hedging Service sets the maximum hedging amount according to the actual mining output of each user to ensure that the hedging amount matches the mining output.
2. More convenient: ViaBTC Hedging Service provides users with auto-repayment function. Once it is turned on, a miner’s daily mining income will be automatically transferred to the hedging account for repayment, which saves the trouble of manual transfer.
3. Faster: ViaBTC Hedging Service uses hedging coins as the initial margin and USDT as the settlement, which is more in line with users' operating habits to obtain stable income faster.
An introduction to ViaBTC Hedging Service
1. Supported Hedging Coins
There are two types of coins involved in hedging transactions, the hedging coin and the settlement coin. When hedging a certain cryptocurrency, the cryptocurrency is called hedging coin. As all hedging coins are settled by USDT, USDT is named as settlement coin.
There are 5 hedging coins supported by ViaBTC Hedging Service: BTC, BCH, ETH and LTC.
When conducting hedging transactions on ViaBTC, all new hedging (opening position or increasing margin) and repayment/auto repayment (decreasing margin) are only allowed to operate in hedging coins. When a hedging order is in process, both of the hedging coin and the settlement coin (USDT) can be served as margin. When a hedging order ends, the settlement coin (USDT) is priority to be selected.
2. Hedging Account
ViaBTC Hedging Service uses independent hedging account instead of mining account. The hedging account includes two types of assets: hedging coin (BTC, BCH, ETH, etc.) and settlement coin (USDT). Hedging assets should be transferred in or out by clicking “Transfer” manually. USDT assets in different hedging coins is independent. That is, for fund transfer, margin calculation, etc., USDT assets in different hedging coins cannot be mixed or added up together.
ViaBTC Hedging Service provides all hedging coins with the fixed 6X leverage ( fixed 20% initial margin ratio), and users are not allowed to adjust leverage by their own.
4. Hedging Period
ViaBTC Hedging Service does not have specified expiry time and delivery. Before triggering forced liquidation, you can decide to continue holding the position or not according to your own situation.
5. Daily Interest Fee
After the hedging order is executed, it means that you have borrowed a certain amount of hedging coins from the system (The amount of the borrowed coin = The hedging amount - Initial margin), and the system will charge 0.05% of the daily interest fee on the borrowed coin.
The daily interest fee calculation unit is the hedging coin, which is calculated once a day (Calculated as one day even less than 24 hours). If the coin is repaid during this period, the interest fee of the day will be calculated according to the actual amount of borrowed coins when calculating the interest.
The daily interest fee is calculated as single interest. When repaying or closing the order, the interest will be paid first, and then the principal.