How Does a Perpetual Future Differ from a Standard Futures Contract?
A perpetual future, unlike a standard futures contract, has no expiration date. It remains open indefinitely until the trader closes the position.
The mechanism that keeps its price aligned with the spot market is the 'funding rate.' A standard future has a fixed expiration date and is typically settled on that date.
Glossar
Expiration Date
Settlement ⎊ An expiration date within cryptocurrency derivatives signifies the final date on which a contract’s underlying asset can be settled, impacting pricing models and risk exposure.
Perpetual Future
Contract ⎊ This instrument synthetically replicates the economic exposure of a traditional futures contract but is structured to exist indefinitely without a mandatory delivery date.
Standard Futures
Contract ⎊ A Standard Future is a legally binding derivative contract traded on a regulated exchange, obligating the buyer to purchase, or the seller to sell, a specified quantity of an underlying asset at a predetermined price on a specific future date.