How Does a DAO Use ‘Perpetual Swaps’ for Hedging or Speculation?

Perpetual swaps are derivatives similar to futures contracts but without an expiry date. For hedging, a DAO can short a perpetual swap on an asset it holds to lock in a price and offset potential losses.

For speculation, it can use leverage to take long or short positions. The 'funding rate' mechanism, which periodically exchanges payments between long and short positions, keeps the swap price close to the spot price.