Crypto glossary
Perpetual futures
Perpetual futures are derivative contracts with no expiry date that let traders bet on a crypto asset's price, usually with leverage, without owning it.
A traditional futures contract settles on a fixed date. A perpetual, often called a perp, never expires, so traders can hold the position as long as they keep enough margin. The design was popularized by BitMEX in 2016 and became the most traded product in crypto by volume.
To keep the contract price close to the spot price, perps use a funding rate. Every few hours, typically eight, traders on one side pay the other: when the perp trades above spot, longs pay shorts, and when it trades below, shorts pay longs. Funding rates are widely read as a gauge of market positioning.
Perps are offered by centralized exchanges and by decentralized platforms such as Hyperliquid and dYdX. Their availability of high leverage makes them a major source of liquidations during volatile moves.
Example
A trader opens a $20,000 long ETH perpetual with 5x leverage. If the funding rate is 0.01% every eight hours, the trader pays $2 per period to short holders while the position remains open.
Related terms
Latest articles on Perpetual futures
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