What a perpetual futures contract is
A perpetual futures contract lets you go long or short on a coin’s price with leverage, without owning the coin and without an expiry date. You can hold it for minutes or months. Most crypto derivatives volume trades on perps, such as BTCUSDT on Binance.
Perpetual futures vs dated futures
| Perpetual futures | Dated (quarterly) futures | |
|---|---|---|
| Expiry | None | Fixed date, then settled |
| Kept near spot by | Funding payments every few hours | Convergence at expiry |
| Price vs spot | Usually very close | Can trade at a premium or discount (basis) |
| Rollover needed | No | Yes, to hold past expiry |
Funding: the anchor to spot
Because a perp never expires, it needs another way to stay near the spot price. At fixed times, usually every 8 hours, one side pays the other. If the perp trades above spot, longs pay shorts; if below, shorts pay longs. This is funding, and it also tells you which side is crowded.
Last price, mark price and index price
- Last price: the most recent trade on that exchange.
- Index price: an average of the coin’s spot price across several major exchanges.
- Mark price: a fair-value price derived from the index, used to calculate unrealised profit and loss and liquidations. Using the mark price stops a single wick on one exchange from liquidating everyone.
The extra data perps give you
Perps publish data that spot markets do not, and it is valuable for any trader:
- Open interest: how many contracts are open, which shows whether new money is entering.
- Funding rate: which side is paying and how crowded it is.
- Taker buy and sell volume: who is aggressive.
Risks to understand first
- Leverage brings liquidation risk.
- Funding is a recurring cost when you hold the crowded side.
- Perps on small coins can be thin, so wicks can be extreme.
CryptoScanX scans 900+ Binance and Delta Exchange perpetuals by open interest, funding and 98 indicators. See the Binance futures scanner.
Frequently asked questions
What are perpetual futures?
Futures contracts with no expiry date. They let you trade a coin’s price long or short with leverage, and they are kept close to the spot price by periodic funding payments between longs and shorts.
What is the difference between perpetual futures and futures?
Regular futures expire on a set date and converge with spot at expiry. Perpetual futures never expire and use funding payments instead to stay near spot.
Why is mark price used for liquidation?
Mark price is based on an index of spot prices across exchanges, so a sudden wick on one exchange does not trigger unfair liquidations.
Crypto futures are leveraged and carry a high risk of loss. This guide is educational and is not investment advice.