What Is a ‘Perpetual Contract’ and How Does It Differ from a Traditional Futures Contract?
A Perpetual Contract is a type of crypto derivative that is similar to a traditional futures contract but notably lacks an expiration date. This allows traders to hold long or short positions indefinitely, speculating on the underlying crypto's price.
To keep the contract price aligned with the spot market price, a mechanism called the 'funding rate' is used, where traders periodically pay or receive a fee. Traditional futures, in contrast, have a set expiration date and often settle in cash or physical delivery.
