A perpetual future — a perp, or perpetual swap — is a derivative contract that tracks an asset’s price and never expires. You can hold it for a minute or a year. Unlike a traditional future there’s no settlement date, no rollover, and no convergence to spot at expiry.
How it stays tethered to spot
Funding. When the perp trades above spot, longs pay shorts a small amount at regular intervals, making it costly to stay long and attractive to short — pushing the perp price back down. When it trades below spot, the payment reverses.
The mechanism replaces expiry. A traditional future converges to spot because it must settle. A perpetual converges because holding the wrong side costs money every hour.
What you’re actually holding
A contract, settled in the collateral asset — usually USDC. You have exposure to the price and nothing else. No ownership, no ability to withdraw the underlying, no rights attached to it.
For most trading purposes that’s exactly what you want. For long-term holding it isn’t, because funding accumulates.
Why perps dominate crypto
One contract per asset instead of a strip of expiries. Leverage built in. Continuous trading with no rollover. Deep liquidity because everyone trades the same instrument. Perpetuals are the majority of crypto derivatives volume by a wide margin.
The two things to understand before trading one
Your liquidation price, and what price triggers it. And the funding you’ll pay if you hold — which over weeks adds up to more than most traders expect.