What Are Perpetual Futures?
Perpetual futures (perps) are derivative contracts that function like traditional futures but never expire. Instead of settlement at a fixed date, they use a funding rate mechanism — periodic payments between longs and shorts — to keep the contract price aligned with the spot market. They are by far the most traded instrument in crypto, accounting for over 75% of all crypto derivatives volume.
How Perpetual Futures Work
Perps mirror the price of the underlying asset. When the perp price trades above spot, positive funding makes longs pay shorts, incentivizing arbitrageurs to short the perp and buy spot — pushing the price back. When it trades below spot, negative funding makes shorts pay longs, encouraging the reverse.
Funding payments occur every 8 hours on most exchanges. Combined with leverage (up to 100x on some platforms), perps provide capital-efficient directional exposure and short-selling capability.
Why It Matters for Traders
Perps generate the richest data in crypto: funding rates reveal sentiment, open interest shows positioning, liquidation levels predict volatility zones, and basis vs spot reveals the cost of leverage. Mastering perpetual futures data is effectively mastering the derivatives market that drives crypto price discovery.