Perpetual Contract: How Crypto Futures Work Without Expiry
Last Updated: June 2, 2026
A perpetual contract is a derivative product that lets you trade the price movement of Bitcoin, Ethereum, and other digital assets without owning the underlying coin or facing an expiration date. Unlike traditional futures, perpetuals use a funding rate mechanism to keep the contract price tethered to the spot market. Traders can go long or short with leverage—often up to 100x—amplifying both potential profits and risks. Understanding margin requirements, liquidation prices, and mark price calculations is essential before opening your first position. You'll also encounter terms like open interest, perpetual swap, and basis, which directly affect your strategy. This guide walks through how perpetual contracts work, when funding payments occur, what triggers liquidation, and how to size positions without risking your entire account. By the end, you'll know whether perpetuals fit your risk tolerance and how to navigate crypto derivatives on a modern exchange. If you're comparing futures products, check our futures vs. options breakdown to see which instrument matches your trading style.
Contract Specifications Compared
| Feature | Perpetual | Quarterly | Spot |
|---|---|---|---|
| Expiration | None—positions can stay open indefinitely as long as margin is sufficient and funding is paid or received every 8 hours | Fixed quarterly settlement date forces closure or rollover; basis converges to zero at expiry | No expiration; you own the asset outright with no time constraint or funding mechanism |
| Funding | Periodic payment (every 8 hours) between longs and shorts keeps contract near spot price | No funding; premium or discount baked into contract price reflects time value until settlement | No funding; you pay network fees and potential spreads but no periodic interest mechanism |
| Leverage | Up to 100x on many platforms; isolated or cross margin determines collateral scope and liquidation risk | Typically 20x–50x; lower than perpetuals because expiry risk makes higher leverage riskier for exchanges | 1x only; you must hold full collateral to buy the asset, no borrowing or margin amplification |
Why perpetual contracts exist
Traditional futures contracts settle on a specific date. Traders who want continuous exposure must roll positions into the next contract month, paying transaction fees and managing basis risk. Perpetual contracts eliminate rollover by never expiring. Instead, a funding rate—calculated from the difference between the perpetual's mark price and the index price (a weighted average of spot exchanges)—adjusts every 8 hours. When the perpetual trades above spot, longs pay shorts; when it trades below, shorts pay longs. This mechanism keeps the contract anchored to the underlying asset's real-time value without requiring settlement. The result is a derivative that behaves like leveraged spot trading but settles in the quote currency (usually USDT or USDC) rather than requiring delivery of the base asset. Funding rates typically range from –0.1% to +0.1% per interval, though volatile markets can push them higher. For a deeper dive into how exchanges calculate these rates, see the CME's overview of funding mechanisms and compare it to decentralized protocols like dYdX's documentation.
Six mechanics every trader must understand
Perpetual contracts operate under rules that differ sharply from spot trading. Here's what you need to know before placing an order.
- Mark price vs. last price Mark price is a fair-value calculation that blends the spot index with the contract's own order book to prevent manipulation-driven liquidations during low liquidity.
- Initial and maintenance margin Initial margin is the collateral required to open a position; maintenance margin is the minimum needed to keep it open—fall below this, and you're liquidated.
- Liquidation price Calculated from your entry, leverage, and margin type; when mark price hits this level, the exchange closes your position and you lose your margin.
- Funding intervals Most platforms settle funding every 8 hours at 00:00, 08:00, and 16:00 UTC; you only pay or receive if you hold the position at the snapshot timestamp.
- Cross vs. isolated margin Cross uses your entire account balance as collateral for all positions; isolated limits risk to the margin allocated to a single trade, protecting the rest of your capital.
- Open interest The total notional value of all outstanding contracts; rising open interest with rising price suggests strong momentum; falling open interest with rising price can signal weakening conviction.
Understanding leverage trading strategies is critical—many new traders underestimate how quickly high leverage erodes capital during small adverse moves. Set stop-losses and never risk more than 2–3% of your account on a single position.
Funding payments accumulate silently. A 0.05% rate every 8 hours compounds to roughly 13% annualized. If you hold a heavily skewed position through multiple intervals, these costs add up. Monitor the funding rate history on your exchange and consider closing positions before high-cost intervals if you're trading a neutral strategy.
Trading perpetual contracts on EveDex
EveDex offers perpetual contracts across 50+ crypto pairs with up to 50x leverage in isolated or cross-margin modes. The platform calculates funding rates in real time using a transparent index that aggregates prices from Binance, Coinbase, and Kraken, ensuring fair mark-price valuation even during flash crashes. You can choose between USDT-margined contracts (settled in stablecoins) or coin-margined contracts (settled in the base cryptocurrency, useful for miners or holders seeking delta-neutral hedging). EveDex's advanced order types—including take-profit/stop-loss combos, trailing stops, and post-only limits—let you automate entries and exits without monitoring charts 24/7. The risk calculator tool shows your liquidation price, potential profit, and funding cost before you commit capital, helping you size positions accurately. Maker fees start at 0.02%, and taker fees at 0.05%, with volume-based discounts for active traders.
