Perpetual Futures Funding, Margin, and Expiry Differences
Summary
The document explains how cryptocurrency perpetual futures let traders take leveraged long or short exposure without owning the underlying asset or managing a fixed expiry. Unlike dated futures, a perpetual contract can remain open while the trader has enough margin to avoid liquidation. The guide also contrasts the need to roll expiring futures with the ongoing position management of perpetuals.
It describes funding payments as a mechanism intended to keep perpetual prices near spot: when the contract trades above spot, longs pay shorts; when it trades below, shorts pay longs. These payments add costs and complexity alongside leverage risk. The discussion notes that dated contracts converge toward spot near expiry, while perpetuals rely on funding. It also mentions mark prices and settlement practices on one exchange, but much of that section is promotional and platform-specific. The article provides no independent performance evidence, and its simplified comparison should not replace contract-specific rules on margin, settlement, or liquidation.
Key ideas
- Perpetual futures provide long or short exposure without a fixed expiry or ownership of the underlying asset.
- Funding payments are used to encourage convergence between perpetual contract prices and spot prices.
- Positive funding generally means longs pay shorts, while negative funding means shorts pay longs.
- Dated futures expire and may require rolling, which can add transaction costs and slippage.
- Leverage, funding costs, and liquidation rules make perpetual contracts risky.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.