What is a perpetual future, and why did crypto invent it?
Every derivative you have met so far had an expiry date. The perpetual future — the perp — does not. It is the dominant instrument in crypto by a wide margin, it originated in this market rather than being imported into it, and regulated equivalents appeared only in July 2025, when Coinbase Derivatives listed CFTC-regulated perpetual-style futures in the United States.
Delete the expiry and you delete the anchor
Recall what actually ties a normal future to the underlying: convergence. On the last trading day, the contract is a claim on the asset essentially immediately, so the two prices must meet. Everything upstream of expiry — basis, carry, the shape of the curve — hangs off that guaranteed meeting point.
Now remove the expiry. There is no last trading day, so nothing forces the contract price to meet spot, ever. Left alone, a perpetual contract would be a free-floating number that drifted wherever demand pushed it, with only sentiment connecting it to the asset it claims to track. That is not a derivative; it is a separate asset with a confusing name.
So the perp's designers replaced the expiry anchor with a continuous one: a periodic cash payment between longs and shorts, sized by how far the contract has drifted from spot. That payment is the funding rate, and it is the entire reason the instrument works. The next lesson takes it apart arithmetically.
The rest of the machinery
Mark price, not last price. Your unrealised P&L and your liquidation level reference a mark price — typically an index built from several spot venues plus a smoothed basis adjustment — rather than the last trade on that venue's own book. This is deliberate and important: it means a single-venue wick (Unit 1) cannot liquidate the whole book, and it means the last traded price you see is not the price your position is valued at.
Linear versus inverse. A linear perp is margined and settled in a stablecoin, so P&L in dollars is simply contracts × price change; the arithmetic behaves the way you expect. An inverse perp is margined and settled in the coin itself, which makes P&L non-linear in price — the value of your collateral moves with the very thing you are exposed to. Inverse contracts are still widely traded and routinely misunderstood; if a P&L figure looks wrong, check which type you are reading.
Continuous, and leveraged. Perps trade on the same 24/7 clock as spot, with leverage available at multiples that no regulated retail futures market permits.
Why it took over
A perp gives continuous exposure with no roll. Everything the Derivatives course taught about rolling futures — the two trades every month, the curve shape converting into realised profit or loss, the roll yield that dominates long-horizon commodity results — simply does not apply. You hold one contract indefinitely and pay or receive funding instead. The cost did not disappear; it changed form from a lumpy monthly roll into a continuous drip. Whether that drip is cheaper depends entirely on the funding rate, which is why the next lesson matters.
The risk statement, up front
Perpetual futures are leveraged instruments. Liquidation is a routine, everyday occurrence in this market, not an edge case, and losses can be total — an isolated-margin position that liquidates loses the entire margin posted, and a cross-margin liquidation can consume the whole account balance. This course teaches you to read these instruments accurately. It is not a suggestion to trade them or to use leverage, and nothing here is advice.
In the data
The spot price a perpetual tracks, bitcoin over the latest month:
The perpetual itself is not in a standard market-data feed, and knowing where that boundary falls saves time. The only bitcoin futures in EODHD's data are CME's two listed contracts, the standard and the micro, which is to say instruments that do have an expiry and therefore do converge. Funding rates, mark prices, index composition and open interest live in the venues' own published specifications.
Try it now
- Find a major venue's public contract specification for its bitcoin perpetual — funding interval, index composition, mark-price formula, margin tiers. It is published and free.
- Write down, from the spec, the two prices that govern your position: the one you trade at and the one you are marked at. Understanding that they are different numbers is most of the literacy.