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

3 answers

• limu593May 20, 2022 · 3 years ago
  Perpetual futures differ from traditional futures contracts in several ways. Firstly, perpetual futures do not have an expiration date, while traditional futures contracts have a fixed expiration date. This means that perpetual futures can be held indefinitely, providing traders with more flexibility. Secondly, perpetual futures use a funding mechanism to maintain their price close to the spot price of the underlying asset, while traditional futures contracts are settled at a predetermined price. This funding mechanism helps to prevent large price deviations and reduces the risk of market manipulation. Lastly, perpetual futures often have lower trading fees compared to traditional futures contracts, making them more cost-effective for traders.
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• Mahbi ZangoieJun 09, 2021 · 4 years ago
  When it comes to digital currencies, perpetual futures and traditional futures contracts have some notable differences. Perpetual futures, unlike traditional futures contracts, do not have an expiration date. This means that traders can hold their positions for as long as they want, without worrying about contract settlement dates. Additionally, perpetual futures use a funding mechanism to ensure that their prices closely track the spot price of the underlying asset. This funding mechanism helps to prevent price deviations and maintain market stability. On the other hand, traditional futures contracts have fixed expiration dates and are settled at predetermined prices. These differences make perpetual futures a popular choice for traders in the digital currency market.
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• Furkan TemelApr 08, 2023 · 2 years ago
  Perpetual futures and traditional futures contracts differ in a few key ways in the context of digital currencies. Perpetual futures do not have an expiration date, which means that traders can hold their positions indefinitely. This is in contrast to traditional futures contracts, which have fixed expiration dates. Additionally, perpetual futures use a funding mechanism to maintain their price close to the spot price of the underlying asset. This funding mechanism helps to prevent large price deviations and ensures that the futures price accurately reflects the market conditions. Traditional futures contracts, on the other hand, are settled at a predetermined price. Overall, perpetual futures offer more flexibility and stability compared to traditional futures contracts in the digital currency market.
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