# What Is a 'Perpetual Futures Contract'? ▴ Learn

**Published:** 2025-11-20
**Categories:** Learn

---

## What Is a ‘Perpetual Futures Contract’?

A perpetual futures contract is a derivative agreement to buy or sell an asset at a future price, but unlike traditional futures, it has no expiration date. It is a key instrument in cryptocurrency derivatives markets.

To keep the contract price anchored to the spot price, a mechanism called the 'funding rate' is used, where traders on one side of the contract periodically pay the other side.

What Is the Difference between a Perpetual Swap and a Traditional Futures Contract?

What Is a Perpetual Swap in Derivatives Trading?

Explain the Difference between “Spot” and “Perpetual” Contracts in Crypto Derivatives

What Is the Difference between a Perpetual Futures Contract and a Traditional Futures Contract?

## Discover More

- 
### [How Do Decentralized Perpetual Futures Exchanges Attempt to Mitigate Liquidation Front-Running?](https://crypto.greeks.live/learn/how-do-decentralized-perpetual-futures-exchanges-attempt-to-mitigate-liquidation-front-running/)
![This macro view captures a complex optical assembly resting on a highly reflective, dark substrate marked with geometric precision, conceptually representing the delicate execution layer of decentralized finance protocols. The central lens element, exhibiting a distinct cyan refraction, symbolizes the oracle mechanisms providing clean price feeds necessary for accurate strike price determination in perpetual swaps. Surrounding metallic components suggest the robust infrastructure required for low-latency order routing and automated market making dynamics. This configuration metaphorically illustrates the transparent yet intricate governance architecture underpinning smart contract collateralization against volatile digital asset exposure, emphasizing risk minimization through precise delta-neutral positioning using synthetic assets and structured financial instruments. The overall aesthetic evokes systemic reliability within high-frequency crypto derivatives trading environments.](https://crypto.greeks.live/wp-content/uploads/2025/10/Precision-Optics-on-a-Reflective-Surface-Modeling-Algorithmic-Hedging-Strategies-in-Digital-Asset-Markets.jpg)

Exchanges use delayed/batched liquidations, decentralized liquidator networks, and MEV-resistant tools to hide the forced trade from front-running bots.

- 
### [What Is the Relationship between the Open Interest in a Futures Contract and the Liquidity of the Underlying Commodity?](https://crypto.greeks.live/learn/what-is-the-relationship-between-the-open-interest-in-a-futures-contract-and-the-liquidity-of-the-underlying-commodity/)
![The highly polished, mirrored surface, potentially representing a decentralized exchange liquidity pool layer or a high-frequency trading memory wafer, reflects a central apparatus. This apparatus features black polymer casings punctuated by metallic bands, strongly suggesting an electromechanical component like a specialized actuator or a proprietary magnetic flux capacitor crucial for on-chain settlement mechanisms. This visual dynamic evokes the tight coupling between real-world physics and digital asset management, specifically concerning limit order book depth and latency arbitrage within DeFi yield farming protocols. The reflection hints at dual layers of transaction verification or collateral staging, essential for complex structured products like perpetual swaps utilizing underlying token collateralization for synthetic asset exposure management, emphasizing precision in execution price discovery.](https://crypto.greeks.live/wp-content/uploads/2025/10/Reflective-Substrate-Interaction-with-Magnetic-Coil-Assembly-Simulating-Decentralized-Exchange-Liquidity-Pools.jpg)

High open interest in futures contracts signals a busy market, which often spills over into a more liquid underlying commodity.

- 
### [What Is the Primary Difference between a Futures Contract and a Perpetual Swap in Crypto?](https://crypto.greeks.live/learn/what-is-the-primary-difference-between-a-futures-contract-and-a-perpetual-swap-in-crypto/)
![This visualization suggests a layered analytical framework resembling a sophisticated financial instrument or time-domain charting device, indicative of complex derivative pricing structures within DeFi. The multi-tiered, radially segmented structure mimics a highly granular trading ledger or a stochastic volatility surface overlay applied to perpetual futures contracts. Red and blue pointed indicators suggest immediate directional momentum, perhaps symbolizing bid ask spreads or high-velocity order book execution latency. The concentric rings and engraved numerical notations imply precise measurement of time decay or theta valuation across varying strike prices in options markets. It evokes the rigorous quantitative analysis underpinning automated market maker strategies and dynamic hedging protocols against systemic smart contract risk. Key concepts include implied volatility, gamma exposure, and on-chain settlement finality under extreme market stress scenarios.](https://crypto.greeks.live/wp-content/uploads/2025/10/Decentralized-Finance-Volatility-Surface-Modeling-Through-High-Frequency-Trading-Chronometers.jpg)

Futures have an expiration date; perpetual swaps do not and use a funding rate to track the spot price.

- 
### [Why Might a DAO Choose a Perpetual Future over a Quarterly Futures Contract for Hedging?](https://crypto.greeks.live/learn/why-might-a-dao-choose-a-perpetual-future-over-a-quarterly-futures-contract-for-hedging/)
![This abstract composition depicts a precarious equilibrium suggestive of decentralized finance risk management structures. Two polished spheres, one cream and one cyan, are juxtaposed above a textured indigo base, symbolizing discrete asset classes or collateralized debt positions. Crossing the visual axis are two slender planes, one pale beige and the other deep azure, intersecting precisely over a small, brass-toned cylindrical object, perhaps representing a central counterparty or a perpetual swap settlement mechanism. This precarious balance mirrors the delicate nature of arbitrage strategies and option gamma exposure within volatile digital asset markets, demanding constant delta hedging against systemic liquidity shocks and ensuring proper collateralization ratios against potential margin calls in high-leverage futures contracts.](https://crypto.greeks.live/wp-content/uploads/2025/10/Geometric-Portfolio-Rebalancing-Visualization-Utilizing-Orthonormal-Vectors-and-Convex-Hull-Approximation.jpg)

Perpetual futures offer continuous, no-expiration coverage, avoiding the administrative burden and market friction of rolling over quarterly contracts.

- 
### [How Are Perpetual Futures Contracts Different from Traditional Futures?](https://crypto.greeks.live/learn/how-are-perpetual-futures-contracts-different-from-traditional-futures/)
![This complex structure manifests as an octahedron composed of translucent, blue-tinted acrylic panels bolted around a central metallic hub, suggesting a high-frequency trading mechanism or atomic settlement layer. It visually embodies the convergence of decentralized finance risk parameters and exotic option payoff structures, specifically mirroring the geometry of an implied volatility surface skew. The sharp, radiating points suggest micro-hedging maneuvers or slippage minimization protocols inherent in granular order book management, crucial for perpetual futures contract integrity. This construct models dynamic collateralization ratios underpinning synthetic asset replication and decentralized options primitives, emphasizing structural resilience against Black Swan liquidity events on Layer-2 scaling solutions. The object suggests the precise engineering required for robust automated market maker designs governing delta-neutral strategies.](https://crypto.greeks.live/wp-content/uploads/2025/10/Crystalline-Geometric-DeFi-Volatility-Instrument-Representing-Perpetual-Swaps-Structure.jpg)

Perpetual futures have no expiration date and use a 'funding rate' mechanism to track the spot price.

- 
### [How Do the Settlement Mechanics Differ for a Perpetual Swap versus an Option?](https://crypto.greeks.live/learn/how-do-the-settlement-mechanics-differ-for-a-perpetual-swap-versus-an-option/)
![This abstract composition features a central, dark, elongated ellipsoid intersecting four planar, sharp-edged geometrical forms resembling blades or wings, set against absolute black. The intersecting planes exhibit subtle color variations from pale cream to deep cyan-teal, suggesting stratification or material differentiation. This structure conceptually models the complex intersection of crypto asset volatility with structured financial engineering. It evokes the overlapping risk layers inherent in sophisticated option payoff diagrams, perhaps representing synthetic perpetual contract settlement mechanisms or segregated asset pools within a cross-chain collateralized debt position. The dark central form suggests a core asset or underlying, while the surrounding planes denote various option strikes and expiration vectors dictating margin requirements and collateralization ratios across DeFi protocols demanding robust oracle price feeds for accurate Mark Price determination. The sharp edges symbolize counterparty risk exposure during high slippage events.](https://crypto.greeks.live/wp-content/uploads/2025/10/Visualizing-Tranche-Structuring-and-Overlapping-Hedging-Strategies-in-Decentralized-Finance-Oracles.jpg)

Perpetual swap settles continuously via a funding rate; option settles only once upon expiration or exercise.

- 
### [What Is a ‘Perpetual Swap’ and How Does Its Funding Rate Function?](https://crypto.greeks.live/learn/what-is-a-perpetual-swap-and-how-does-its-funding-rate-function/)
![This high-contrast visualization depicts an angular cleavage across a spheroidal substrate exhibiting differential spectral absorption highlighting underlying structural components. The image suggests the meticulous, perhaps adversarial, intersection required for complex crypto derivative clearance, mirroring the structure of a hard fork or a contentious on chain governance vote impacting locked collateral. Dark particulate matter speckling the surfaces resembles transaction dust or residue from failed atomic swaps executed near implied strike prices in perpetual futures contracts. The bipartite division reflects the necessary separation between clearinghouse functions and underlying decentralized ledger validation essential for reliable options expiration pricing mechanisms within the DeFi ecosystem. Keywords: Atomic Swaps DeFi Options Expiration Strike Price Perpetual Futures Clearinghouse Validation Governance Vote Collateral Lock Up Digital Asset Settlement.](https://crypto.greeks.live/wp-content/uploads/2025/10/Microcosmic-Analysis-Of-Encapsulated-Digital-Asset-Futures-Settlement-Mechanism-Dynamics.jpg)

Perpetual swaps are futures without expiry. The funding rate mechanism periodically aligns the swap price with the spot price.

- 
### [Define a Perpetual Futures Contract and Its Inherent Front-Running Vulnerability](https://crypto.greeks.live/learn/define-a-perpetual-futures-contract-and-its-inherent-front-running-vulnerability/)
![This close-up depicts a precision-machined central spindle surrounded by a dark substrate exhibiting pie-chart-like sectors in muted teal and gold tones, speckled with particulate matter suggesting operational stress or residue from a decentralized ledger environment. The structure strongly evokes the complex mechanics underlying high-frequency trading execution mechanisms within decentralized finance DeFi infrastructure. Specifically, the segmented ring likely represents state-change indicators in a complex smart contract mechanism governing perpetual futures settlement or dynamic volatility skew adjustments integral to synthetic asset options pricing models. Key elements suggest atomic swap verification protocols or perhaps a visualization of ledger state synchronization across disparate nodes in a permissionless network, where precision controls option Greeks like Theta decay assessment in exotic derivatives. The metallic sheen and internal concentric rings hint at proprietary hardware security modules HSMs underpinning institutional crypto custody solutions required for managing large collateral pools for undercollateralized lending protocols.](https://crypto.greeks.live/wp-content/uploads/2025/10/Macro-View-of-Black-Hardware-Assembly-Featuring-Segmented-Optical-Surface-Indicative-of-On-Chain-Governance-Calibration.jpg)

Perpetual futures' liquidations create predictable, market-moving forced trades that front-runners exploit to profit from the underlying asset's price change.

- 
### [How Can a Perpetual Swap Contract Be Used to Bet on a Coin’s Potential Failure Due to Double-Spending Risk?](https://crypto.greeks.live/learn/how-can-a-perpetual-swap-contract-be-used-to-bet-on-a-coins-potential-failure-due-to-double-spending-risk/)
![The highly polished, near-black convex dome, reminiscent of deep-sea obsidian or a synthetic sapphire, symbolizes the Black Scholes model's core input the implied volatility surface. Its deep indigo hue contrasts sharply with the cool, reflective silver setting, suggesting a meticulously engineered collateralized debt obligation tranche settlement. This visual tension reflects the delta-hedging calculus required to manage systemic risk in decentralized finance yield farming protocols. The smooth curvature conveys the smooth payoff profile of deep in the money European call options, while the stark lighting hints at liquidation cascades within perpetual swap markets. It embodies precision in calculating synthetic asset exposure against stochastic volatility regimes. The overall impression speaks to robust algorithmic execution of complex structured products.](https://crypto.greeks.live/wp-content/uploads/2025/10/Deep-Blue-Onyx-Encapsulation-Reflecting-Market-Volatility-In-Digital-Asset-Derivatives-Pricing.jpg)

A trader can short a perpetual swap to bet on a coin's collapse from double-spending risk, profiting if the price crashes.

---

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