This module explores perpetual futures, a dominant derivative in crypto that allows indefinite trading on asset prices with high leverage. We covered how perps work—centered on the funding rate, and how they differ from traditional futures. We highlighted their advantages, including liquidity, leverage, hedging, and arbitrage, while emphasizing inherent risks such as liquidation, funding costs, and regulatory considerations. Armed with history, mechanics, and best practices, users can evaluate perps’ opportunities and risks before trading.
Q1: What is unique about perpetual futures compared to traditional futures?
A1: No expiration date
Q2: What mechanism keeps perpetual futures prices aligned with spot markets?
A2: Funding rate
Q3: What is a major risk of trading perps?
A3: Margin calls and liquidation risk
Q4: What practical use do Perpetual Futures have besides speculation?
A4: Hedging spot positions
