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

The primary difference is the expiration date. A traditional futures contract has a fixed expiration date, after which all positions are settled.

A perpetual futures contract, however, has no expiration date, allowing traders to hold positions indefinitely. The perpetual contract uses the funding rate mechanism to ensure its price tracks the underlying asset's spot price, a feature not needed in traditional futures due to their settlement schedule.