Perpetual Contract Mechanics

This section covers how perpetual futures work on Yamata at a fundamental level, including leverage mechanics, calculating P&L, funding rates, and how mark pricing keeps contracts tethered to real markets. Understanding these will help you trade Perps more effectively and safely.

Leverage and Position Notional

Leverage allows you to control a larger position with a smaller amount of capital (margin). In Yamata Perps:

• You can select a leverage up to the maximum allowed for the asset (see Markets & Leverage for specific limits). For example, at 10× leverage, every 1 USDC of margin lets you open 10 USDC worth of position.

• The Position Notional Value is the size of your position in USDC terms. If you go long 0.1 BTC at $30,000, your position notional is $3,000. With 10× leverage, that $3,000 position would require only ~$300 in collateral initially.

• Adjusting Leverage: Yamata uses cross-margin, so you don’t manually set a per-trade leverage value in the UI; instead leverage is implicitly determined by how large a position you take relative to your account equity. You could effectively use higher leverage by opening a very large position with minimal available margin, or lower leverage by keeping positions small relative to your collateral. The platform may provide a slider or info showing what fraction of your collateral is used — which corresponds to effective leverage. Always be mindful: higher effective leverage = higher risk of liquidation.

• Effect of Leverage on Margin: Required margin = Position Notional / Leverage. If you double your position size (while collateral stays same), you’re effectively doubling your leverage usage. Yamata will not allow you to open positions that exceed the maximum leverage or your available balance. If you try to take on too large a position, the order may be rejected or partially filled to stay within margin limits.

Profit and Loss (P&L)

Perpetual P&L calculation works as follows:

• Unrealized P&L: As the market price moves, your open position gains or loses value on paper. For a long position, unrealized P&L = (Current Mark Price – Entry Price) × Position Size. For a short position, P&L = (Entry Price – Current Mark Price) × Position Size. Yamata continuously updates this using the Mark Price of the contract (see below). Unrealized P&L affects your margin equity in real time.

• Realized P&L: This is locked-in profit or loss. It occurs when you close a position (fully or partially) or when funding fees are applied. For example, if you bought 0.1 BTC-PERP at $30k and later sold at $32k, you realize $200 profit (0.1 * $2k). Realized P&L immediately adjusts your account balance in USDC. Similarly, any portion of your position closed by the liquidation engine or via stop orders will realize P&L at that execution price.

• P&L Settlement in USDC: All profits and losses are settled in USDC. If you end a trade with more USDC than you started, that’s your profit. If less, that’s your loss. Yamata does this automatically; if you were using non-USDC collateral, it will convert as needed (e.g., adding to your USDC balance on profit, or selling some collateral to cover losses).

• Example: You have 500 USDC in collateral and no positions. You go long 1 ETH-PERP at $1,500 using 5× leverage (so position = $1,500 notional, margin used ~ $300). If ETH’s mark price rises to $1,600, unrealized P&L = $100 (1 ETH * $100 gain). Your equity is now $600. If you close the position at $1,600, you realize $100 profit and your USDC balance becomes $600. If price fell to $1,400 instead, you’d have –$100 unrealized (equity $400), and closing would leave you with a realized loss, ending with $400.

Mark Price and Index Price

Yamata uses an Index Price and Mark Price to ensure fair P&L and liquidation calculations:

• Index Price: The index price is a composite price of the underlying asset derived from major spot markets or oracle feeds. It reflects the true market value of the asset (e.g., the current global price of BTC in USD).

• Mark Price: The mark price is the price at which P&L and liquidation thresholds are calculated for the perpetual contract. It is typically derived from the index price plus a decaying premium or discount based on the contract’s funding rate. The mark price protects against market manipulation: even if the order book price spikes briefly, your P&L is based on the more stable mark price. For example, if BTC-PERP is trading at 0.5% above the index, a funding rate will be in effect (longs paying shorts) to bring it in line. The mark price might be kept closer to the index to avoid unfairly liquidating traders just because of a brief premium/discount.

• Last Traded Price vs Mark Price: The last traded price is just the most recent execution on Yamata’s order book. The mark price may differ slightly. Yamata displays the mark price on the interface and uses it for margin calculations. Always pay attention to the mark price, as it’s what determines your unrealized P&L and liquidation risk.

Funding Rates

Perpetual futures require a mechanism called funding to tether their price to the underlying index, since they never expire:

• What is Funding? Funding is a periodic payment exchanged between longs and shorts based on the difference between the perpetual contract price and the true market price. If the perpetual is trading above the index (i.e., longs are pushing price higher than spot), a positive funding rate occurs and longs will pay shorts. Conversely, if the perp trades below the index, funding is negative and shorts pay longs. This incentivizes traders to take the opposite side and brings the perp price back in line.

• Frequency: Yamata’s funding payments are applied at regular intervals (for example, every hour or every 4 hours, depending on the market). The funding rate is quoted as an annualized percentage but charged in each interval on your position notional. The countdown timer and next funding rate for each market are visible in the interface.

• Calculation: At the funding timestamp, if you hold a position, you will pay or receive funding. The amount = (Position Notional) × (Funding Rate). For instance, if you are long $10,000 BTC-PERP and the hourly funding rate is 0.01%, you’d pay $1 in funding to a short holder (and vice versa if rate is negative, you’d receive $1). Yamata automatically credits or debits this from your USDC balance. Note that paying funding will slightly decrease your account equity over time (if you’re on the paying side), and receiving funding increases it.

• No Fees to Platform: Funding is a peer-to-peer flow; Yamata doesn’t collect it as a fee. It’s exchanged among traders to balance the market.

• Monitoring Funding: You can monitor the current funding rate and history in the market info. If funding rates are high (positive or negative), it’s often due to heavy long or short bias in the market. Traders should factor funding costs into their strategy, especially if holding positions for long durations.

Perpetual Contract Lifecycle

• No Expiry: Unlike traditional futures, perpetual contracts don’t have an expiration date. Your position can remain open indefinitely as long as you have sufficient margin to maintain it. This is great for long-term hedges or leveraged bets, but remember that funding payments over time can add up.

• Contract Unit: Yamata’s perps are linear contracts, meaning 1 contract typically corresponds to 1 unit of the underlying asset (e.g., 1 BTC-PERP = value of 1 BTC in USDC). This makes P&L calculation intuitive. Some smaller assets may use a scaling factor (like 1000 units of an altcoin per contract) for convenience, but the principle is the same and will be indicated if so.

• Order Matching: Orders are matched on the CLOB just like spot trades. Maker orders rest in the book, taker orders execute immediately against available orders. Even though settlement is in USDC, the trading pairs are labeled as <ASSET>-PERP (with USDC implied as the quote currency).

• Fees: Trading fees for perps are typically a small percentage of notional, charged in USDC. Yamata will have a maker/taker fee schedule (to be detailed separately). Fees are deducted from your account at order execution. Ensure you maintain a bit of extra collateral to cover fees and funding beyond just the position margin.

By understanding leverage effects, P&L calculations, mark pricing, and funding, you’ll be better equipped to manage your perpetual trades on Yamata. Next, we’ll cover Order Types available in perpetual trading, including advanced options like stop orders and reduce-only flags that help execute your strategy precisely.