Perpetual Futures

In simple terms

Perpetual futures are bets on whether a cryptocurrency's price will go up or down, without an end date. Unlike traditional bets that expire, you can hold these positions as long as you want, and funding payments help keep the price aligned with the actual market.

Definition

Derivative contracts without expiration dates that track an asset's price.

In depth

Perpetual futures are leveraged derivative contracts that allow traders to long or short an underlying asset with no expiration date. These contracts use a funding rate mechanism—periodic payments between long and short positions—to keep the contract price anchored to the spot price via arbitrage incentives. Prices are typically maintained through oracle feeds that report the real-time asset price, and positions are settled continuously rather than at predetermined dates, allowing traders to manage risk dynamically.

How does Perpetual Futures work?

A perpetual future is a derivative contract that tracks an asset's price and has no expiry date. A trader posts margin and takes a long or short position in the contract rather than owning the asset itself. Because there is no settlement date to pull the contract price back toward spot, exchanges use a periodic funding payment — commonly every eight hours — exchanged between longs and shorts to keep the contract near an index price built from spot venues. The position can stay open indefinitely as long as margin requirements are met.

An example

A trader posts $1,000 of margin and opens a $5,000 notional perpetual long, using illustrative figures. If funding is positive at 0.01% for each eight-hour period, they pay $0.50 per period to the short side — about $1.50 a day — regardless of which way price moves. Nothing expires, but funding payments and any adverse price move both reduce the margin backing the position.

Figures are illustrative only.

What beginners get wrong

• Having no expiry does not mean having no cost, since funding is charged every few hours and accumulates over weeks of holding.
• A perpetual contract conveys no ownership of the underlying coin, so there is nothing to withdraw to a personal wallet.
• Entry price, mark price, and index price are three different numbers on most platforms, and liquidation is measured against the mark.
• Retail access to crypto perpetuals is restricted in many jurisdictions, and the rules differ by country and change over time.

Related terms

• Funding Rate
• Futures Market
• Leverage
• Liquidation
• Open Interest
• Long

Part of

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