Define a Perpetual Futures Contract and Its Inherent Front-Running Vulnerability

A perpetual futures contract is a derivative that allows traders to speculate on the future price of an asset without an expiration date. Its price is anchored to the underlying asset's spot price through a funding rate mechanism.

The primary front-running vulnerability arises during large liquidations. When a highly leveraged position is liquidated, the required forced trade of the underlying asset is predictable and market-moving, creating a clear opportunity for front-runners to exploit the price impact of the liquidation.