Explaining Perpetual Futures: Crypto's Most Traded Product

Perpetual futures, commonly called perps, have surged in popularity to become the most heavily traded product in cryptocurrency markets. Unlike traditional futures, they have no settlement date, allowing traders to hold positions indefinitely.

The first perpetual futures contract was launched by BitMEX in 2015. The instrument uses a funding rate mechanism to periodically balance long and short positions, ensuring the contract price stays aligned with the underlying spot market.

By trading volume, perps now dominate the crypto derivative landscape, often exceeding spot markets and standard futures. Their appeal lies in features such as high leverage, continuous trading, and reduced administrative complexity.

• No expiry date – positions can be held forever as long as margin requirements are met.
• Funding rate – periodic payments between longs and shorts to anchor the price to spot.
• High leverage – many exchanges offer leverage up to 100x or more on perp contracts.

For anyone involved in digital asset trading, understanding perps is essential. They account for a significant portion of exchange order book depth and liquidity, influencing price discovery across markets.