Hi It's Unicorn

Recently, Binance has issued a multi-asset mode for contract trading, which provides traders with greater flexible use in the funds.

What is the multi-asset mode?

Binance’s contract transactions can be divided into USD-M future and COIN-M future. The difference between these two is the method of settled assets.

USD-M future: It uses USDT or BUSD as a collateral.  

COIN-M future: It uses base assets such as BTC, ETH...  as a collateral.

In the original USD-M future contract, users can choose USDT or BUSD for settlement, but the margins of the two are individual and cannot be offset. Therefore, investors must deposit additional funds when one of the contracts is to be liquidated; or sell another contract to make up the margin. In the process, you also need to exchange currency, such as convert USDT to BUSD. With the newly launched Multi-Assets Mode, users can share their margin across USDT-margined and BUSD-margined contracts. For instance, if I have USDT100 under USDT-margined contract and BUSD50 under the BUSD-margined contract, then total tradable assets is USDT100 plus BUSD50 under my multi-asset mode.

What is the advantage of using the multi-asset mode?

Multi-Assets Mode allows users to share their margin across USDT-margined and BUSD-margined contracts. Users can use one position’s profits as margin to offset losses in another losing position. Thus, it can reduce the risk to be liquidated. For instance, I have USDT100 under USDT-margined contract and BUSD50 under the BUSD-margined contract. If I lose $70 in USDT-margined contract, my position is about to be liquidated. However, I earn $200 profits in the BUSD-margined contract so I can use the profit as margin to offset losses in USDT-margined contract. Here I can relieve liquidation crisis and I don’t need to exchange BUSD to USDT to add margin in USDT-margined contract. 

What is the difference between multi-asset mode and cross collateral?

Cross collateral allows users collateralize their crypto assets to borrow against another crypto asset. Presently, Binance accepts the collateral assets including BUSD, BTC. 

You may think cross collateral is similar to multi-asset mode, but their operation is completely different. Multi-Assets Mode is based on original USD-M futures which use USDT or BUSD as the margin. Users can share their margin across USDT-margined and BUSD-margined contracts. It’s not mortgage lending. Cross collateral means that users who do not hold Stablecoins such as USDT can collateralize their crypto-assets to participate in the futures market. Therefore, you need to evaluate lending risk.