> For the complete documentation index, see [llms.txt](https://docs.bbx.com/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.bbx.com/business/on-chain-spot-trading/overview.md).

# Overview

BBX On-chain Spot trading refers to the direct exchange of assets between buyers and sellers at the current market price. Once a trade is executed, the transaction is settled immediately, and each party receives the corresponding asset.

In spot markets, traders exchange \*\*real, underlying tokens\*\*, and ownership of the asset is transferred upon settlement.

#### How On-chain Spot Trading Works

In an on-chain spot trading pair such as ETH/USDT:

* Buying ETH means paying USDT at the current spot price and receiving ETH
* Selling ETH means delivering ETH and receiving the equivalent amount of USDT

After the trade is completed,

* the buyer holds ETH in their account
* the seller holds USDT in their account

There is no leverage, expiration, or contract-based settlement involved in on-chain spot trading.

#### Key Characteristics

* Immediate settlement
* Direct ownership of the underlying asset
* No leverage or liquidation mechanism
* Profit and loss depend solely on price movement of the asset

On-chain spot trading is commonly used by traders who wish to \*\*own assets outright\*\* or execute simple buy-and-sell strategies without additional risk layers.

#### On-chain Spot Trading vs Perpetual Trading

On-chain spot trading and perpetual trading differ fundamentally in how positions are structured and settled.

**Asset Ownership**

For On-chain Spot Trading,

* Traders buy and sell the actual underlying tokens
* For example, buying ETH means holding ETH in the account
* The trader benefits if the asset price rises and incurs losses if the price falls

For On-chain Perpetual Trading,

* Traders do \*\*not\*\* own the underlying asset
* Instead, they trade perpetual contracts that track the price of the asset
* Positions represent exposure to price movements rather than token ownership

**Trading Direction**

For On-chain Spot Trading, 

* Traders can only profit from price appreciation
* Selling requires holding the asset beforehand

For On-chain Perpetual Trading,

* Traders can go \*\*long\*\* when expecting prices to rise
* Traders can go \*\*short\*\* when expecting prices to fall
* Both directions are available without holding the actual token

**Risk Profile**

For On-chain Spot Trading, 

* No liquidation risk
* Losses are limited to the initial investment
* Positions can be held indefinitely

For On-chain Perpetual Trading,

* Positions may be subject to liquidation
* Leverage amplifies both gains and losses
* Funding payments may apply depending on market conditions

#### Summary

On-chain spot trading enables straightforward asset exchange with immediate settlement and full ownership of the underlying tokens. It is well suited for users seeking simple exposure to asset price movements without leverage or contract-based risk.

In contrast, perpetual trading offers flexible directional exposure and leverage but does not involve ownership of the underlying asset and introduces additional risk factors.

Understanding these differences allows traders to choose the trading method that best aligns with their strategy and risk tolerance.