Overview
Perpetual futures are derivative contracts without expiry that track an underlying asset's price, allowing leveraged positions. They dominate on-chain and centralized derivatives trading. Funding rates keep their price anchored to the spot market.
How It Works
Traders open long or short positions with leverage, posting margin as collateral. A funding mechanism periodically transfers payments between longs and shorts to align the perpetual price with the underlying. Positions can be liquidated if margin is insufficient.
Why It Matters
Perpetuals are the largest crypto derivatives product and a major source of exchange revenue. On-chain versions bring leveraged trading to DeFi with transparency. They carry high liquidation and smart contract risk.
Related Concepts
Perpetual Futures are offered by dYdX, GMX, and centralized exchanges. They depend on Oracles for pricing and connect to Margin and Liquidation concepts.