What is perpetuals?

Futures contracts with no expiry date, held near the spot price by a periodic funding payment between long and short holders.

Perpetuals are the highest-volume crypto derivative and are almost always traded with leverage. Retail access is restricted in a number of jurisdictions.

The word turns up constantly in market commentary, usually as "perps", and it is the reason headline volume figures for crypto dwarf spot trading. The common mistake is treating a perpetual as a cheaper way to own a coin. It is not ownership at all. You hold a contract against an exchange, you pay or receive funding for as long as you hold it, and you can be closed out by the venue without selling anything yourself.

How it works

A traditional futures contract expires, and expiry is what drags its price back to spot. A perpetual has no expiry, so the anchor is replaced by a cash payment called the funding rate, exchanged directly between position holders at a set interval.

1. The venue publishes an index price built from spot markets and a mark price used for valuing positions.
2. When the perpetual trades above the index, funding is positive and longs pay shorts. When it trades below, shorts pay longs.
3. Because holding the expensive side costs money every interval, traders are paid to push the contract back toward spot.
4. Positions are collateralized by margin. If your margin falls below the maintenance margin, the position is liquidated at the mark price, not at the last trade.

Intervals and formulas differ by venue and are published in each exchange's own contract specifications. Eight hours is common, but shorter intervals exist, so check the venue rather than assuming.

Example

Suppose you open a $10,000 long position with $1,000 of margin, which is 10x leverage. Funding is quoted at 0.01% per eight-hour interval, an illustrative figure. You pay 0.01% of the notional, so $1 per interval, or roughly $3 a day, regardless of whether the price moves. Hold for a month at that rate and funding alone has cost about $90, or 9% of your margin.

Now the price moves 8% against you. The loss on $10,000 of notional is $800, which is 80% of your margin. Long before that, the venue's maintenance margin threshold is crossed and the position is closed. A move that would have been an unpleasant week for a spot holder ends the position entirely.

Why it matters when you buy

If your goal is to own a coin, spot is the product that does that, and the fee comparison shows what buying it actually costs. Perpetuals matter to a buyer mostly as context: funding and open interest tell you how much of an asset's activity is borrowed rather than owned. Availability is the other half, because several regulators bar retail access to these contracts, which is what the jurisdiction pages track.

Related terms

funding rate — the payment that anchors the price; leverage — borrowed size against your margin; liquidation — forced closure at the threshold; mark price — the value used for margin calls; open interest — how many contracts are outstanding; reduce only order — the flag that stops accidental reopening.

Questions

Do I own the coin if I hold a perpetual long?

No. You hold a contract with the exchange that tracks the price. You cannot withdraw the asset, you have no claim on it, and your exposure ends when the position is closed or liquidated.

Why does funding sometimes cost more than the trade?

Funding is charged on the full notional, not on your margin. At 10x leverage a small percentage of notional is ten times that percentage of your own money, so a long-held position in a crowded direction can bleed steadily even in a flat market.

Are perpetuals available everywhere?

No. Retail access is restricted or prohibited in several jurisdictions, and some exchanges run separate regulated entities that offer spot only. Check what the venue is licensed to offer where you live.