A stablecoin-margined perpetual is collateralised in dollars. Your margin is worth the same regardless of what the coin does; only the position’s P&L moves.
A coin-margined perpetual is collateralised in the coin itself. Now two things move together, and if you are long, they move the same way.
The loop
Long a coin-margined perpetual and the price falls. The position loses — and the collateral behind it is denominated in the asset that just fell, so the margin is worth less too. Your equity drops on both sides of the equation at once, and the liquidation price arrives sooner than the same nominal leverage would suggest in a dollar-margined contract.
Then the liquidation sells the coin, pushing price down, which further devalues everyone else’s coin-denominated collateral. That is a genuinely reflexive structure, and it is a large part of why cascades in crypto travel further than the initial move deserves.
The mirror case
It runs the other way for shorts, and it is worth stating because it is not symmetric in feel. Short a coin-margined perpetual and a falling price gains on the position while the collateral loses value — the two partially cancel, which dampens rather than amplifies. Coin-margined contracts are structurally kinder to shorts and harsher to longs, for reasons that have nothing to do with anyone’s view.
Why coin-margined exists at all
It suits holders. Someone who intends to own the coin regardless can post what they already have, hedge with it, and keep the exposure they wanted — without touching dollars or accepting stablecoin issuer risk as an additional counterparty.
The practical rule
Do not carry nominal leverage across from one to the other. The same multiple is a different risk, and a long position collateralised in the thing it is long is holding one exposure twice.