Trading on Quanto involves a unique type of derivative contract known as a Quanto Perpetual Future. Unlike traditional futures where your position size is static, on Quanto, your displayed position size is dynamic. This is because your profit and loss are calculated in a fixed amount of $QTO for every dollar the underlying asset moves.
Understanding this mechanic is essential for managing your positions and risk effectively.
The Core Mechanic: Fixed $QTO PnL
The single most important rule to understand is:
For every $1 change in the underlying asset’s price, your profit or loss changes by a fixed amount of 100 $QTO.
This means you are not directly trading ETH for USD, for example. Instead, you are trading a contract whose payout is denominated in $QTO, based on the price movement of the ETH/USD pair.
Why Your Displayed Position Size is Dynamic
Because your PnL is fixed in $QTO, the USD value of that PnL changes as the price of $QTO fluctuates. To provide a user-friendly experience, the platform displays your position size in terms of the underlying asset (e.g., 1 ETH), but this number must be adjusted in real-time to accurately reflect your real USD exposure.
Let's break it down with an example:
Scenario A: The price of $QTO is $0.01
The USD value of your fixed PnL is:
100 QTO * $0.01/QTO = $1.00.This means for every $1 ETH's price moves, your PnL is $1.00.
In this case, the platform will show your position size as 1 ETH. This feels intuitive and is similar to a standard inverse contract.
Scenario B: The price of $QTO rises to $0.02
The USD value of your fixed PnL is now:
100 QTO * $0.02/QTO = $2.00.Now, for every $1 ETH's price moves, your PnL is $2.00. Your sensitivity to the market has doubled.
To accurately reflect this, the platform dynamically adjusts your displayed position size. Your position, for the exact same underlying contract, will now show as 2 ETH.
Key Takeaway: Your underlying contract has not changed, but as $QTO becomes more valuable, its PnL power increases. The platform updates your displayed size to reflect this new reality.
Implications for Traders
This unique structure has important implications:
Dual Price Exposure: Your ultimate PnL is exposed to the price volatility of both the asset you are trading (e.g., ETH) and the
$QTOtoken itself. A profitable ETH trade could be offset by a decrease in the$QTOprice.Focus on USD Value: It's often more useful to think about your position in terms of its margin usage and total USD value rather than the displayed number of ETH or BTC, as that number is dynamic.
Complex Hedging: Hedging a position from Quanto on another exchange is not a 1:1 process, as your true position size on Quanto changes with the price of
$QTO.
This system is powerful, but it requires you to be aware of the price of $QTO not just for settling PnL, but for its direct impact on your open positions.