Technical Definition
Perpetual Futures
Perpetual Futures (Perps) Derivative contracts that track the price of an underlying asset (e.g., BTC) with no expiration date, settled in cash or stablecoins.
By Crypto University Editorial
Funding RateFutures
✦ Key Insight
Why It Matters: Allows directional bets with high leverage on both long and short sides without owning the asset. Dominates CEX volume but carries high risk. How It Works: Funding rate payments (every 8 hours on most platforms) keep perp price close to spot. You pay/receive funding based on long/
✕ Common Misconceptions
It is often mistaken for similar sounding terms, but the technical implementation is distinct.
Detailed Explanation
Why It Matters:
Allows directional bets with high leverage on both long and short sides without owning the asset. Dominates CEX volume but carries high risk.
How It Works:
Funding rate payments (every 8 hours on most platforms) keep perp price close to spot. You pay/receive funding based on long/short imbalance.
Common Mistakes:
Holding through adverse funding rates; treating perps like spot (ignoring liquidation risk).
FAQs
Why no expiry?
Funding mechanism replaces it.
Linear vs. Inverse?
Linear (USDT-margined) settles in stablecoin; inverse (coin-margined) in the underlying crypto.
In Practice
“Opening a 20x long on BTC/USDT perp at $60k; price rises 1% = ~20% profit (minus funding).”
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