Perpetual futures: what they are and how they differ from regular futures
A perpetual future (“perp”) is a derivative on an asset’s price with no expiry date. You can hold it as long as you like, and a periodic payment — the funding rate — keeps the contract price near the price of the underlying asset. Almost all spread and funding arbitrage is built on perps.
How a perp differs from other instruments
| Spot | Quarterly future | Perpetual future | |
|---|---|---|---|
| What you buy | the asset itself | a contract on the asset’s price | a contract on the asset’s price |
| Term | none | fixed expiry date | none |
| Leverage | none (except margin spot) | yes | yes |
| Short position | only by borrowing | simple | simple |
| How price stays near spot | it is the spot | converges to spot by expiry | funding: a payment between longs and shorts |
How a perp stays near the spot price
A quarterly future has a day on which its price must equal the spot price, so any extra premium disappears by itself. A perp has no such day, and funding takes the role of the “pull”: if the contract trades above spot, longs pay shorts and holding a long becomes unattractive; if it trades below, shorts pay. The mechanics are covered in the guide to the funding rate.
Margin and leverage
To open a position several times larger than their own funds, a trader posts collateral — margin. The ratio of position size to collateral is the leverage. If the price moves against the position and the collateral no longer covers it, the exchange closes the position by force — a liquidation. The funding payment is calculated on the position’s notional value, not on the collateral.
- Isolated margin: collateral is tied to one position, and only it can be lost.
- Cross margin: the whole free balance supports all positions; liquidation is further away but the entire account is at stake.
USDT contracts and coin margin
- Linear (USDT, USDC) — collateral and result in a stablecoin; profit and loss are simply size in coins × price difference. These contracts dominate and are what the scanner compares.
- Inverse (coin-margined) — collateral and result in the coin itself (for example BTC). Profit in dollars is non-linear, and the collateral loses value along with the coin.
Contract size and multiplier
“One contract” means different things on different exchanges: one coin, 0.001 coin, a fixed dollar amount. Some tickers are “thousandths” (1000PEPE is the price of 1000 coins). Before comparing prices and volumes, contracts must be converted to one unit — coins.
Risks of perps
- Liquidation with leverage. The higher the leverage, the closer the liquidation price.
- Funding changes. The rate changes and can flip sign — a position that received a payment starts paying it.
- Venue risk. Outages, halted withdrawals, auto-deleveraging, smart-contract bugs on perp DEXs — see arbitrage risks.
- Different rules. Each exchange has its own funding periods and caps, its own price for liquidation (mark, index and last price), fees and position limits.
Why arbitrage cares
One coin has perps on dozens of venues, and they differ in price and in funding rate. Those differences are the raw material for the cross-exchange spread and funding arbitrage: two perps with opposite positions form a price-neutral pair that earns on the difference.
How SpreadScope shows it
The scanner collects perps from centralized exchanges and perp DEXs into one table: it brings rates to the pair’s period and calculates the spread and accumulated funding from real payments. A convenient place to start is the page of funding rates by coin.