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

A traditional futures contract has a fixed expiration date, after which the contract must be settled. A perpetual swap, or perpetual futures contract, has no expiration date, allowing traders to hold the position indefinitely.

To keep the perpetual swap price anchored to the underlying asset's spot price, it employs a funding rate mechanism. This funding rate is paid between long and short position holders periodically, which is the core financial difference from traditional futures.