Perpetual Futures

Perpetual futures are derivative contracts that track an underlying asset's price with no expiry or settlement date, kept aligned to spot through periodic funding payments between long and short holders.

How it works

A perpetual future is a derivative contract whose price tracks an underlying asset without an expiration date. Unlike a traditional futures contract, which settles on a fixed date, a perpetual position can be held open indefinitely. To keep the contract price anchored to the spot price of the underlying, the market applies a recurring payment called funding, exchanged directly between traders rather than paid to the venue.

Funding is calculated at set intervals, often every one or eight hours. When the perpetual trades above the spot reference, longs pay shorts; when it trades below, shorts pay longs. This transfer incentivizes arbitrage that pulls the contract back toward spot. Positions are typically margined and leveraged, and a venue liquidates a position when its collateral falls below the maintenance requirement. These mechanics apply across both centralized exchanges and onchain venues that run order books or automated matching.

Why it matters

Perpetual futures account for a large share of trading volume in digital asset markets, giving institutional participants leveraged exposure, hedging tools, and a continuous price signal without the roll costs of dated contracts. Onchain perpetual venues have expanded the scope of what can be traded and studied, as shown when the Oxford Institute for Energy Studies drew on the research described in OIES Uses Allium On-Chain Data to Study Oil Perpetual Futures on Hyperliquid to examine oil price discovery on a decentralized exchange. Funding rates, open interest, and liquidation flows are watched closely as indicators of positioning and leverage.

Related terms

• Funding rate
• Open interest
• Liquidation
• Mark price
• Margin

Frequently asked questions

How do perpetual futures differ from traditional futures?

Traditional futures expire and settle on a fixed date, requiring rolls to maintain exposure. Perpetual futures have no expiry and instead use recurring funding payments between traders to keep the contract price aligned with spot.

What is the funding rate?

The funding rate is a periodic payment exchanged between long and short holders. When the contract trades above spot, longs pay shorts; when below, shorts pay longs. This mechanism keeps the perpetual price close to the underlying.

Why does a perpetual futures position get liquidated?

A position is liquidated when its collateral falls below the maintenance margin requirement, usually after adverse price moves or accumulated funding costs. The venue closes the position to prevent losses beyond the posted collateral.

Allium provides onchain data infrastructure. Companies named in this article may be Allium customers, prospects or commercial counterparties. The authors and other Allium personnel may hold positions in the assets discussed. This article is informational only and is not investment, legal or tax advice. Data and information last reviewed: October 19, 2026.