Perpetual Futures Explained: How They Work and Why Traders Use Them

When you trade perpetual futures, a type of derivative contract that never expires and keeps its price close to the real-time spot market through funding payments. Also known as perps, they let traders go long or short on crypto without owning the actual asset—making them the most popular way to trade Bitcoin and Ethereum on exchanges like Binance, Bybit, and OKX. Unlike regular futures that expire on a set date, perpetual futures keep going forever. That’s why they’re perfect for traders who want to hold positions for days, weeks, or months without worrying about rolling contracts.

What keeps perpetual futures from drifting too far from the real price? The funding rate, a periodic payment exchanged between long and short traders to balance supply and demand. When longs pay shorts, it means buyers are overextended. When shorts pay longs, sellers are dominating. It’s a self-correcting system built into every major crypto exchange, and it’s the reason these contracts stay useful even during wild price swings. You’ll also see leverage, the ability to control large positions with a small amount of capital. Some platforms offer up to 100x leverage, which can turn small moves into big profits—or wipe out your account fast if you’re not careful. That’s why most experienced traders use stop-losses, keep position sizes small, and avoid over-leveraging—even if the exchange lets them.

Perpetual futures aren’t for everyone. They’re used mostly by active traders who watch charts, track funding rates, and understand how margin calls work. But if you’re trying to hedge your crypto holdings, speculate on price drops, or just test how leverage affects your strategy, they’re one of the most powerful tools in Web3. The posts below cover real exchange setups, funding rate tricks, how to avoid liquidation, and why some traders treat perps like a casino while others treat them like a business. You’ll find reviews of platforms that handle them well, breakdowns of how funding works on different chains, and warnings about the hidden risks most beginners miss.