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Derivatives 1 min read

Perpetual Swap

Also known as: Perp, Perpetual Futures

Futures contract with no expiry. Tracks spot via a periodic funding payment between longs and shorts.

Anatomy

  • No expiry — unlike traditional quarterlies.
  • Funding rate — keeps the perp tethered to spot (see Funding Rate).
  • Leverage — usually 1x to 125x depending on exchange and pair.
  • Mark price — fair value used for liquidations, not the noisy last trade.

Risks

  1. Liquidation cascades are normal crypto events, not outliers.
  2. Funding compounds — a small daily cost becomes huge over weeks.
  3. Exchange risk — all of this lives on a centralized platform you don't control.

Perpetuals are a pro tool. If you don't understand funding, margin and maintenance, trade spot until you do.