Inverse contracts pay in coins, non-linearly
Coin-margined futures are collateralised in the base coin, so your PnL is entangled with price in a non-linear way: shorts gain convexity (earn more coins when price falls), longs lose convexity (earn fewer coins per dollar move as price rises). For the simpler linear case use the PnL / ROE calculator. Liquidation price? Use the liquidation calculator.
Inverse contracts: PnL in the coin itself
Coin-margined (inverse) futures use the crypto as collateral and settle PnL in it β long BTC with BTC. The kink: your collateral's dollar value moves with the trade. Long and rising, your BTC PnL is worth more dollars per coin (convexity working for you); long and falling, you lose BTC while each remaining BTC is worth fewer dollars β losses compound on the way down faster than USDT-margined equivalents.
Not every exchange runs deep coin-margined order books β thin inverse liquidity widens slippage right when the convexity above is working against you:
The math produces asymmetric outcomes versus linear contracts: a +10% move on an inverse long gains less in coin terms than β10% loses, because the payoff is 1/price-shaped. Miners and long-term holders use them deliberately β hedging inventory while keeping balances in coin β but directional traders often hold them accidentally, unaware their "identical" position carries different curvature.
When each type fits: USDT-margined for clean dollar-denominated speculation and easy PnL math; coin-margined for hedging coin inventory, accumulating the base asset, or expressing dollar-price views while living coin-denominated. The wrong default costs a few percent of surprise at settlement β always in the direction you didn't model.
FAQ
How is coin-margined (inverse) PnL calculated?
PnL in coin = contract value Γ (1/entry β 1/exit). Inverse contracts are collateralized and settled in the base coin, so the payoff is non-linear in USD terms.
How does it differ from USDT-margined?
USDT-margined PnL is linear in price. Inverse (coin-margined) PnL is convex for shorts and concave for longs, because you earn or lose coins whose USD value is also moving.