Why Are Perpetual Swaps Considered a Key Derivative in the Crypto Market?

Perpetual swaps are a type of futures contract without an expiration date, allowing traders to hold a position indefinitely. They are key because they closely track the spot price through a mechanism called the funding rate.

This funding rate is exchanged between long and short positions, incentivizing the swap price to remain near the spot price. They offer high leverage and deep liquidity, making them essential for speculation and hedging.