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

A perpetual swap is a derivative contract similar to a futures contract, but it has no expiration date, hence 'perpetual.' Unlike traditional futures, which are settled on a specific date, perpetual swaps use a 'funding rate' mechanism to keep the contract price anchored to the underlying spot price. This funding rate is exchanged between the long and short positions periodically.