How do perpetual contracts differ from traditional futures contracts in the context of digital currencies?

3 answers

• Ran YangJul 31, 2024 · a year ago
  Perpetual contracts and traditional futures contracts differ in several key ways. Perpetual contracts are a type of derivative contract that allows traders to speculate on the price of an underlying asset without an expiration date. This means that traders can hold their positions indefinitely, as long as they have sufficient margin to cover potential losses. On the other hand, traditional futures contracts have a fixed expiration date, after which the contract is settled. Additionally, perpetual contracts often use a funding mechanism to maintain the contract's price close to the spot price of the underlying asset, while futures contracts rely on the forces of supply and demand in the market. Overall, perpetual contracts offer more flexibility and continuous trading opportunities compared to traditional futures contracts.
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• McCarty GormsenSep 14, 2024 · 10 months ago
  When it comes to digital currencies, perpetual contracts and traditional futures contracts have distinct differences. Perpetual contracts, also known as perpetual swaps, are designed to mimic the characteristics of spot trading, allowing traders to hold positions indefinitely. They do not have an expiration date, which means traders can keep their positions open for as long as they want. On the other hand, traditional futures contracts have a fixed expiration date, typically monthly or quarterly, after which the contract is settled. Another key difference is the funding mechanism used in perpetual contracts. This mechanism ensures that the contract's price closely tracks the spot price of the underlying asset, preventing large deviations. In contrast, futures contracts rely on market forces to determine their price. Overall, perpetual contracts provide more flexibility and convenience for traders in the digital currency market.
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• mohamed belkaidJan 30, 2025 · 6 months ago
  Perpetual contracts and traditional futures contracts have some notable differences in the context of digital currencies. Perpetual contracts, as the name suggests, do not have an expiration date, allowing traders to hold positions indefinitely. This is in contrast to traditional futures contracts, which have a fixed expiration date. Additionally, perpetual contracts often use a funding mechanism to maintain the contract's price close to the spot price of the underlying asset. This funding mechanism ensures that the contract remains in line with the market and prevents large deviations. On the other hand, traditional futures contracts rely on the forces of supply and demand in the market to determine their price. Overall, perpetual contracts offer more flexibility and continuous trading opportunities for digital currency traders compared to traditional futures contracts.
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