Risk note: Cryptocurrency and DeFi involve substantial risk of loss. This article is informational only and is not investment, legal, or tax advice.
Perpetual futures are derivatives without an expiry date. On decentralized exchanges they are often settled in crypto collateral with funding rates that keep the contract price near the spot index.
What perpetuals are
In finance, perpetual futures, also known as perpetual swaps or colloquially as perps, are contract agreements to non-optionally buy or sell an asset at an unspecified point in the future. Perpetual futures are cash-settled, and they differ from regular futures in that they lack a pre-specified delivery date and can thus be held indefinitely without the need to roll over contracts as they approach expiration. Payments are periodically exchanged between holders of the two sides of the contracts, long and short, with the direction and magnitude of the settlement based on the difference between the contract price and that of the underlying asset, as well as, if applicable, the difference in leverage between the two sides. Perpetual futures were first proposed by economist Robert Shiller in 1992, to enable derivatives markets for illiquid assets. Perpetuals serve the same function as contrac
s t + 1 = ( f t + 1 − f t ) + ( d t + 1 − r t f t ) {\displaystyle s_{t+1}=(f_{t+1}-f_{t})+(d_{t+1}-r_{t}f_{t})}
Funding and margin
where f t {\displaystyle f_{t}} is the price of the perpetual at day t, d t {\displaystyle d_{t}} is the dividend paid to owners of the underlying asset on day t, and r t {\displaystyle r_{t}} is the return on an alternative asset (expected to be a short-term, low-risk rate) between time t and t+1.
This section covers “funding and margin” in practice: what a beginner should know, which concepts to revisit, and how to check sources. Describe your situation and pick one small step to try for a week.
On-chain venues
In finance, perpetual futures, also known as perpetual swaps or colloquially as perps, are contract agreements to non-optionally buy or sell an asset at an unspecified point in the future. Perpetual futures are cash-settled, and they differ from regular futures in that they lack a pre-specified delivery date and can thus be held indefinitely without the need to roll over contracts as they approach expiration.
Payments are periodically exchanged between holders of the two sides of the contracts, long and short, with the direction and magnitude of the settlement based on the difference between the contract price and that of the underlying asset, as well as, if applicable, the difference in leverage between the two sides.
Risk notes for traders
Perpetual futures were first proposed by economist Robert Shiller in 1992, to enable derivatives markets for illiquid assets. Perpetuals serve the same function as contracts for difference (CFDs), allowing indefinite, leveraged tracking of an underlying asset or flow, but differ in that a single, uniform contract is traded on an exchange for all time-horizons, quantities of leverage, and positions, as opposed to separate contracts for separate quantities of leverage typically traded directly with a broker.
This section covers “risk notes for traders” in practice: what a beginner should know, which concepts to revisit, and how to check sources. Describe your situation and pick one small step to try for a week.
In short: a clear concept, a trusted source, and one small practical step beat collecting headlines alone.
Further reading and context
Compare several sources and separate definition, history, and practical advice. The same word can mean different things in everyday speech and specialist writing. Note years, names, and cause–effect links. End with a short checklist. Talk with someone experienced so theory meets examples.