A linear contract has profit and loss that change proportionally with the underlying price movement for a fixed position quantity. In crypto markets, many such contracts quote and settle in a stablecoin. “Linear” describes the payoff calculation, rather than guaranteeing a particular collateral policy or a stable settlement asset.
A direct price-difference calculation
For a simple long, gross profit or loss equals underlying-equivalent quantity multiplied by the difference between exit price and entry price. The price difference is reversed for a short. Any contract multiplier must already be reflected in that quantity or applied correctly once.
Suppose a hypothetical long represents three units, enters at 100 USDT per unit and exits at 108 USDT. Gross profit is 3 × (108 − 100) = 24 USDT, before trading fees and funding. The same-sized short loses 24 USDT over that move.
Straightforward arithmetic still carries risk
Leverage affects required margin and returns measured against that margin; it does not multiply the profit again after quantity has been fixed. A smaller margin buffer can nevertheless make liquidation more likely during adverse moves.
Linear contracts can be perpetual or dated, with different funding and expiry obligations. Some account systems accept other collateral even when profit and loss settle in a stablecoin. Settlement-asset risk, collateral fluctuations and execution costs remain relevant alongside the linear price exposure.