Glossary

Perpetual futures

Perpetual futures are derivative contracts with no expiry date. A funding rate keeps their price close to the spot price.

A perpetual future is a derivative contract that tracks the price of an asset and never expires. A trader can hold the position as long as the margin stays sufficient. This makes perpetuals different from dated futures, which settle on a fixed date.

Because there is no expiry, the contract needs another way to stay near the spot price. The funding rate does this. When the perpetual price is above spot, long traders pay short traders. When it is below spot, short traders pay long traders. These payments push the price back toward spot.

Perpetuals are widely traded on crypto derivatives venues. Many of them allow high leverage, so liquidations are common. Each exchange sets its own margin rules, funding formula and liquidation engine. Compare the rules before you compare data between exchanges.