Trading & AMMs

Perpetuals

Perpetual Futures

Derivative contracts that track asset prices without expiration dates

Definition

Perpetual futures are derivative contracts that track an underlying asset's price without an expiration date. They use funding rates to keep prices aligned with spot markets.

Example

Trading ETH perpetuals on dYdX allows you to go long or short ETH with leverage, paying or receiving funding rates based on market sentiment.

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What to check

Treat it as a strategy: map each step, each contract dependency, each exit condition, and the downside before committing capital. The main checks are: Funding rate costs; Liquidation risk; Basis risk; Counterparty risk.

Risks to Consider

  • Funding rate costs
  • Liquidation risk
  • Basis risk
  • Counterparty risk

Common Questions

What does Perpetuals mean in DeFi?

Perpetuals means Derivative contracts that track asset prices without expiration dates. The useful question is not only the definition, but how the mechanism changes risk, return, liquidity, or governance for the user.

How is Perpetuals used in practice?

A practical example: Trading ETH perpetuals on dYdX allows you to go long or short ETH with leverage, paying or receiving funding rates based on market sentiment.

What should I check before relying on Perpetuals?

Check funding rate costs, liquidation risk, basis risk, counterparty risk. Also verify liquidity, oracle assumptions, admin controls, and whether the protocol has been tested during stressed markets.

Related Terms

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