---
title: "What Is a Perpetual Contract in Crypto Trading"
description: "A perpetual contract lets you trade crypto with leverage without an expiry date. Learn how funding rates, margin requirements, and liquidation work."
url: "https://evedex.com/en/blog/what-is-a-perpetual-contract-in-crypto-trading/"
lang: "en"
author: "Vladimir Shepelev"
date_published: "2026-05-11"
date_modified: "2026-09-15"
---

# What Is a Perpetual Contract in Crypto Trading

Vladimir Shepelev · May 11, 2026

Last Updated: September 15, 2026

A [perpetual contract](https://evedex.com/en/what-are-perpetual-futures/) is a derivative that lets you speculate on the price of Bitcoin, [Ethereum](https://evedex.com/en/eth/), or other cryptocurrencies without owning the underlying asset. Unlike traditional **futures contracts**, perpetual contracts have no expiration date, so you can hold a position for as long as you want — provided you manage your **margin** and cover **funding rates**. These contracts use **leverage**, meaning you control a large position with a relatively small amount of capital. That leverage can magnify gains, but it also increases the risk of **[liquidation](https://evedex.com/en/what-is-liquidation/)** if the market moves against you. Perpetual contracts have become the dominant trading instrument on crypto exchanges, accounting for the majority of [derivatives](https://evedex.com/en/crypto-derivatives/) volume. They're popular because they offer 24/7 trading, deep liquidity, and the ability to profit in both rising and falling markets. If you want to understand how perpetual contracts work before placing your first trade, **explore [leverage trading](https://evedex.com/en/leverage-trading/) strategies** or **review margin requirements on EVEDEX**. By the end of this guide, you'll know how funding rates keep prices anchored, what triggers liquidation, and how to size positions without overleveraging.

## Perpetual vs Traditional Futures

| Feature | Perpetual | Futures | Spot |
| - | - | - | - |
| Expiration | None — hold indefinitely as long as margin is sufficient and funding is paid | Fixed expiry date (weekly, monthly, quarterly) — position settles at expiration | None — you own the asset outright with no time constraint |
| Funding | Periodic funding rate every 8 hours to align contract price with spot | No funding — basis (price difference) converges naturally at settlement | No funding — you pay only the purchase price and any fees |
| Leverage | Up to 125× on many exchanges, amplifying both gains and liquidation risk | Typically lower (5–20×), depending on the exchange and contract specifications | None — you trade with the full capital required to buy the asset |

## How Perpetual Contracts Track Spot Prices

Perpetual contracts stay close to the spot market through a mechanism called the [funding rate](https://evedex.com/en/blog/what-is-funding-rate/). Every eight hours, traders with long positions pay shorts (or vice versa) depending on whether the perpetual price is trading above or below the spot price. When the contract trades at a premium, longs pay shorts, incentivizing arbitrageurs to sell the perpetual and buy spot, which pushes the contract price down. When the contract trades at a discount, shorts pay longs, encouraging traders to close shorts or open longs, lifting the perpetual price back toward spot. This continuous adjustment prevents the kind of divergence you see in traditional futures, where basis can widen significantly before expiration. Funding rates are small — often between –0.01% and +0.01% per interval — but they compound if you hold a position for days or weeks. You can [read more about funding rate mechanics on Binance's official documentation](https://www.binance.com/en/support/faq/funding-rates).

![Funding rate chart](https://evedex.com/images/images4articles/164.webp)

## Six Factors That Drive Perpetual Contract Risk

Before you open a leveraged position, understand the variables that determine whether you profit or get liquidated.

1. **Leverage ratio** Using 10× leverage means a 10% adverse move wipes out your margin; 100× leverage leaves almost no room for [volatility](https://evedex.com/en/blog/how-to-stake-mina/).
2. **Maintenance margin** Exchanges require a minimum margin balance to keep your position open; fall below it and you're liquidated automatically.
3. **Funding rate direction** If you're long and funding is consistently positive, you pay shorts every eight hours, eroding your position over time.
4. **Liquidation price** This is the exact price at which your position is closed; it's calculated from your entry, leverage, and remaining margin.
5. **Order book depth** Thin liquidity can cause slippage during liquidation, meaning you lose slightly more than your margin in extreme moves.
6. **Volatility spikes** Sudden price swings — common in crypto — can trigger cascading liquidations, pushing the market even further against you.

Traders often underestimate funding costs on longer holds. If you're planning to keep a position open for weeks, check the historical funding rate for that pair. A rate that averages +0.01% per interval costs you roughly 1% per month on your position size, which adds up. You can see real-time funding rates on most exchange dashboards or [track them on CoinGlass](https://www.coinglass.com/FundingRate).

Liquidation doesn't always happen at the exact theoretical price. During flash crashes or exchange outages, the liquidation engine may execute your close at a worse price than calculated, leaving you with a small negative balance (though most exchanges have insurance funds to cover this). Always use [stop-loss](https://evedex.com/en/blog/crypto-order-types-explained/) orders as a secondary defense and never commit your entire account balance to a single leveraged position.

## Trading Perpetual Contracts on EVEDEX

EVEDEX is a hybrid crypto derivatives exchange — off-chain matching, on-chain settlement on Arbitrum — built for traders who want transparent margin calculations and access to 52 perpetual contracts across crypto majors, altcoins, stocks, forex and commodities. The platform supports leverage up to 200× on BTC-USD, ETH-USD and SOL-USD for positions up to $50,000 notional, 100× on XRP, oil, silver and gold, and lower caps on other pairs, with maintenance margin set per pair and position size. A margin call fires at 80% margin utilisation, and liquidation is measured against the mark price. EVEDEX runs cross margin only: your entire futures balance backs every position, giving you more flexibility but higher account-wide risk; isolated margin, which limits risk to the funds allocated to a single position, is planned but not yet live. You can **compare isolated vs cross-margin setups** to understand the trade-off. The exchange charges 0.015% maker and 0.045% taker fees, with cashback of up to 35% on your own trades, and funding is computed every eight hours and settled hourly at one eighth of the rate. Perpetual futures carry a high risk of loss.

## FAQ

### Do perpetual contracts expire?

No. Unlike futures, perpetual contracts have no expiration date. You can hold a position indefinitely as long as you maintain sufficient margin and pay or receive funding rates every eight hours.

### What is a funding rate in perpetual contracts?

Funding rates are periodic payments between long and short traders that keep the contract price aligned with the spot market. When positive, longs pay shorts; when negative, shorts pay longs.

### Can I lose more than my initial margin?

On most exchanges, no. Your position will be liquidated before losses exceed your margin. However, in extreme volatility, slippage during liquidation can result in a small additional loss beyond your margin.

### What leverage can I use on perpetual contracts?

Leverage typically ranges from 1× to 125×, depending on the exchange and the asset. Higher leverage amplifies both gains and losses, increasing liquidation risk.

### How do I avoid liquidation?

Monitor your margin ratio closely, use stop-loss orders, avoid excessive leverage, and add margin if your position moves against you. Liquidation happens when your margin falls below the maintenance requirement.