Perpetual Futures

Also called Perpetual Swap, a derivative contract on a Perp DEX allowing traders to speculate on digital asset prices without an expiration date.

What is Perpetual Futures?

Perpetual futures, commonly known as “perps” in the digital asset space, are futures contracts traded on decentralized exchanges (Perp DEXs) like GMX, dYdX, or Hyperliquid, enabling traders to speculate on the price movements of digital assets such as Bitcoin or Ethereum without a fixed expiry date. Unlike traditional futures contracts, which settle at a predetermined date, perpetual futures allow traders to hold positions indefinitely, provided they maintain sufficient margin to cover potential losses. These contracts are settled in real-time, with profits or losses calculated based on the difference between the entry price and the current mark price, typically using stablecoins like USDC or USDT for payouts.

Perpetual futures operate through smart contracts on blockchain networks, ensuring non-custodial and transparent trading. They support leverage, often ranging from 5x to 50x, allowing traders to control larger positions with less capital—for example, a $1,000 margin with 10x leverage controls a $10,000 position on dYdX. To maintain market balance, perps use funding rates, periodic fees (e.g., every 1–8 hours) exchanged between long and short traders to discourage overcrowding on one side. For instance, if more traders are long on GMX, they pay a funding rate to shorts, incentivizing market equilibrium. Oracles like Chainlink provide real-time price feeds to ensure accurate pricing and prevent manipulation.

The lack of an expiration date makes perpetual futures ideal for long-term speculation, hedging, or arbitrage, but they carry risks like liquidation if the market moves against a position and margin requirements are not met. As of September 2025, platforms like Hyperliquid report high trading volumes, with billions in daily perp trades, highlighting their dominance in decentralized finance (DeFi) markets. Traders must monitor funding rates, leverage levels, and market volatility to manage risks effectively.