Understanding Perpetual Futures
Perpetual futures, or "perps," are derivative contracts that allow traders to speculate on asset prices without expiration dates. Unlike traditional futures contracts that expire on specific dates requiring settlement or rollover, perpetuals can be held indefinitely.
This innovation originated in the cryptocurrency space with BitMEX introducing them in 2016. They've since become the dominant form of crypto derivatives trading and are now expanding into RWA markets.
Key characteristics of perpetual futures include: - No expiration or settlement date - Funding rate mechanism to track spot prices - Leverage capabilities - Long and short position support
For traders, perpetuals offer the benefits of futures (leverage, short selling) without the complexity of managing expiration dates. This makes them particularly popular for both short-term speculation and longer-term directional bets.
The rise of perpetual DEXes like Hyperliquid, Ostium, and Lighter has brought these instruments fully on-chain, enabling trustless trading with self-custody of funds.