Perpetual futures — perpetual swaps, or simply perps — are derivative contracts that let traders hold long or short exposure to an asset without owning it and without an expiry date. They are the most traded instrument in crypto, and they are also increasingly offered on assets beyond crypto, such as stock indices and individual shares.
How they differ from ordinary futures
A traditional futures contract settles on a set date, and its price converges on the spot price as that date approaches. A perpetual never settles, so it needs another way to stay anchored to the underlying market. That mechanism is the funding rate:
- When the perpetual trades above the spot or index price, longs pay shorts at each funding interval, making it more expensive to stay long.
- When it trades below, shorts pay longs.
Those payments pull the contract price back toward the underlying price without any delivery.
Leverage and margin
Perps are traded on margin: a trader posts collateral worth a fraction of the position size. That magnifies both gains and losses. If losses eat through the posted margin, the exchange closes the position automatically — a liquidation. Clusters of liquidations can accelerate a price move, because forced selling (or buying) triggers further forced orders.
Why they matter for reading the market
- The total value of open perpetual positions is a large share of open interest across crypto.
- The funding rate shows which side of the market is crowded and paying for it.
- A perp discount — the contract trading below spot — describes more demand to be short than long at that moment.
Perps are not the asset
A perpetual on a stock gives price exposure; it does not give ownership, votes or dividends in the usual sense. That distinction matters when perps on equities are compared with tokenized shares.
In MoonWire analysis
Our coverage reports perpetual listings, venue volumes, funding and positioning as sources and exchanges report them — as descriptions of market structure, not as trading suggestions.