How Do Perpetual Futures Contracts Utilize Stablecoins for Margin and Settlement?

Perpetual futures, a major type of crypto derivative, predominantly use stablecoins like USDT or USDC as the collateral (margin) and the final settlement currency. This is known as "coin-margined" or "stablecoin-margined" settlement.

The stablecoin acts as the reliable dollar-equivalent for posting collateral and for the P&L (Profit and Loss) realized at the contract's closure or upon liquidation. The stablecoin's $1 peg is crucial because it allows the leverage ratio and margin maintenance levels to be calculated consistently in fiat-equivalent terms.