How Can a Perpetual Swap Contract Be Used to Bet on a Coin’s Potential Failure Due to Double-Spending Risk?
A perpetual swap is a type of futures contract without an expiry date. A trader who believes a coin is highly susceptible to double-spending and will eventually crash can open a short position on the coin's perpetual swap.
If the attack occurs and the price collapses, the short position will be highly profitable. The funding rate mechanism ensures the perpetual swap price stays close to the spot price, making it an efficient tool for long-term bearish bets.
Glossar
Perpetual Swap
Mechanism ⎊ Perpetual swaps, within cryptocurrency markets, represent agreements to exchange cash flows based on the difference between a cryptocurrency’s current price and a user-defined price, perpetually, without an expiration date.
Funding Rate Mechanism
Mechanism ⎊ Funding Rate Mechanisms within cryptocurrency derivatives represent periodic payments exchanged between traders holding opposing positions in perpetual contracts, designed to anchor the perpetual contract price to the underlying spot market.
Perpetual Swap Price
Index ⎊ The perpetual swap price represents the market price of a perpetual futures contract, which is designed to closely mirror the price of the underlying cryptocurrency index.
Perpetual Swap Contract
Mechanism ⎊ Perpetual swap contracts, within cryptocurrency markets, represent agreements to exchange cash flows based on the difference between a cryptocurrency’s current price and a user-defined price, perpetually, without an expiry date.