Perpetual futures (perps)
Also called: perps · perpetual swap · perpetual contract · perp
Definition
Perpetual futures (perps) are futures contracts with no expiry date that use a periodic funding rate to keep their price close to the underlying spot price.
This entry is shown in English.
How Perpetual futures works
A normal futures contract expires, so its price naturally converges with spot at the end. A perpetual has no end date, so it needs another anchor. That anchor is the funding rate: at set intervals, traders on one side pay traders on the other side.
When the perp trades above the index price, funding is usually positive and longs pay shorts, which encourages shorting and pulls the price down. When it trades below, funding turns negative and shorts pay longs. Funding is commonly settled every 8 hours, but some exchanges and pairs use 1, 2 or 4 hours.
Perps are the most traded crypto derivative. Centralized exchanges such as Binance, OKX, Bybit and Bitget list hundreds of them, and on-chain venues such as Hyperliquid offer perps too. You can hold a position as long as your margin covers losses and funding, but liquidation is based on the mark price, not only the last traded price.
Example
Suppose you hold a 10,000 USDT long on a BTC perp and the funding rate is +0.01% per 8-hour interval. Each interval you pay 10,000 × 0.01% = 1 USDT to shorts, so 3 USDT a day and about 90 USDT over 30 days if the rate stayed unchanged. If funding flips to -0.02%, you would instead receive 2 USDT per interval while staying long.
Common mistakes
- Ignoring funding costs on a long-held leveraged position, where they can add up to a significant amount.
- Assuming funding is always settled every 8 hours on every pair.
- Watching only the last traded price when liquidation depends on the mark price.
Learn and practise
FAQ
Why are they called perpetual futures?
Because they never expire. You can keep the position open indefinitely as long as you meet the margin requirements.
Who pays the funding fee on perpetual futures?
It depends on the sign of the rate. Positive funding means longs pay shorts, and negative funding means shorts pay longs. The exchange does not keep it.