Perpetual futures are leveraged derivative contracts designed without a fixed conventional expiry date. Venues typically use funding payments, mark prices, and margin rules to keep the contract economically connected to a spot reference.
How it works
Traders post margin rather than paying the full notional value. As losses consume available margin, the position can approach maintenance requirements and be liquidated under venue rules.
Funding transfers are commonly exchanged between long and short positions at specified intervals. The sign and formula vary by venue and market conditions.
Why it matters
Owning a perpetual position is not the same as owning the underlying crypto asset. The trader also accepts leverage, liquidation, platform, mark-price, and funding risks.
The lack of a calendar expiry removes one futures feature but does not remove holding costs or forced-close mechanisms.
A simple market example
A trader with a 10× perpetual position has far less room for an adverse move than an unleveraged spot holder, even before exact maintenance margin and fees are considered.
Common mistakes
Calling a perpetual futures balance 'my coins' as if it were self-custodied spot ownership.
Estimating liquidation from leverage alone without checking the venue's maintenance margin and mark-price rules.
Frequently asked questions
Why don't perpetual futures expire?
Their design replaces a conventional expiry cycle with ongoing margin and funding mechanisms.
What is a funding rate?
A venue-defined periodic payment mechanism used to influence the relationship between perpetual and reference prices; formulas vary.
Is liquidation price simply 1/leverage away?
No. That is only a rough intuition; real thresholds depend on maintenance margin, fees, mark price, and venue rules.
Educational content only. Definitions describe common market usage and may vary by jurisdiction, instrument, or institution.