Perpetual Contract (Perp)
Futures contract without expiry date — the most popular instrument for crypto trading.
A perpetual contract (perp) is a futures contract without an expiry date — you can hold it indefinitely, unlike traditional futures that expire monthly or quarterly.
How it stays near spot price:
•Funding rate mechanism — every 8h, longs pay shorts (or vice versa) depending on perp price deviation from spot
•If perp is more expensive than spot → longs pay → incentive to short and equalize price
Why it's popular:
•Most liquid instrument in crypto (BTC/USDT perp on Binance > $20 billion daily)
•Leverage up to 125x
•No expiry date, no rollover
•Can hedge spot position
Risks:
•Funding rate costs accumulate over time
•Liquidation — leverage amplifies losses
•Mark price vs last price — difference can cause "wick" liquidations