Perpetual Contracts: How Crypto Futures Work Without Expiration
Last Updated: June 7, 2026
Perpetual contracts have become the dominant derivatives product in crypto, accounting for more daily volume than spot markets on many platforms. Unlike traditional futures contracts that settle monthly or quarterly, perpetual contracts never expire. Traders can hold leveraged long or short positions indefinitely, with the contract price anchored to the underlying spot index through a periodic funding rate mechanism. This structure eliminates the friction of rolling positions and allows for 24/7 leveraged exposure without worrying about expiration dates or contango. If you've ever wondered how exchanges like EVEDEX offer non-stop Bitcoin or Ethereum futures, perpetual swaps are the answer. By the end of this guide, you'll understand how funding payments keep perpetual prices in line, how margin requirements protect both trader and venue, and when a perpetual contract makes sense over traditional futures or spot trading.
Perpetual vs traditional futures
| Feature | Perpetual | Quarterly | Weekly |
|---|---|---|---|
| Expiration | None — positions roll continuously until closed or liquidated | Fixed settlement date every three months, requiring manual roll or cash settlement | Expires Friday or end of week, short holding window increases roll friction |
| Funding | 8-hour funding payments between longs and shorts to anchor price to spot | No funding — basis reflects time value and converges to zero at expiry | Minimal time value but still settles to index, no ongoing funding mechanism |
| Leverage | Typically 1–125× depending on exchange and collateral; higher on BTC/ETH pairs | Usually 1–20× with stricter margin due to settlement risk and illiquidity near expiry | Often capped at 10–25× because short duration limits liquidity and increases roll costs |
How funding rates work
A funding rate is a small periodic payment exchanged directly between traders to keep the perpetual contract price close to the spot index. Every 8 hours, longs pay shorts when the perpetual trades at a premium, and shorts pay longs when it trades at a discount. The rate is calculated as (mark price − index price) ÷ funding interval, typically capped at ±0.75% per period to prevent runaway costs. This mechanism replaces expiration: instead of converging to spot at settlement, the contract self-corrects continuously. When funding turns deeply negative, it signals oversupply of shorts and can precede a squeeze. Exchanges publish the next funding rate an hour in advance, giving traders time to close or hedge if the cost is unfavorable.
Six things to check before trading perpetuals
Before opening your first leveraged position, confirm these factors:
- Margin mode Isolated margin limits loss to the position's collateral; cross-margin uses your entire account balance and can survive larger drawdowns but risks total liquidation.
- Liquidation price The exchange calculates this based on your leverage and entry. If mark price hits liquidation, your position closes instantly — often with slippage.
- Funding history Check 7-day average funding on the pair. Persistent positive funding means longs are expensive to hold; negative funding favors longs over time.
- Order book depth Thin books amplify slippage and increase the chance of cascading liquidations. Look for tight spreads and volume at key levels.
- Insurance fund Reputable venues maintain an insurance fund to cover losses when a position goes negative. Check fund size and recent depletion events.
- Leverage limit by tier Most exchanges reduce max leverage as position size grows. A 100 BTC perpetual might cap at 20× while a 1 BTC position allows 125×.
Perpetuals are not inherently riskier than spot if you size correctly, but leverage magnifies every tick. A 2% adverse move on 50× leverage wipes out your margin. Always calculate liquidation distance before entering, and use stop-loss orders to exit before the exchange does it for you.
Funding can also erode profits on long-term holds. A position held through 30 days of 0.05% daily funding pays 15% annualized — more than many altcoins yield in staking. If you plan to hold for weeks, compare cumulative funding cost against rolling quarterly futures or simply holding spot with options for downside protection. Perpetuals shine for active traders who close positions within hours or days, not multi-month HODLers.
Trading perpetuals on EVEDEX
EVEDEX offers perpetual contracts on Bitcoin, Ethereum and 37 other crypto pairs, plus stocks, commodities and forex, with leverage of up to 200× on BTC, ETH and SOL for positions up to $50,000 notional and lower caps on smaller markets. Funding is calculated every 8 hours and charged hourly, with the rate displayed on each pair's ticker. The platform uses a fair-price mark to prevent manipulation-driven liquidations: your position liquidates based on a volume-weighted index of spot exchanges, not the order book on EVEDEX alone. All positions use cross margin. A $500,000 ADL Protection Reserve, launched July 18, 2026, reduces auto-deleveraging when accounts go underwater. Open a perpetual position with a deposit from 6 USDT and a 5 USDT minimum order, and close or adjust leverage anytime without fees beyond the standard maker/taker spread.
