What are the differences between perpetuals and futures in the world of cryptocurrency?

3 answers

• Hina munirJan 19, 2023 · 3 years ago
  Perpetuals and futures are both types of derivative contracts in the world of cryptocurrency. However, there are some key differences between the two. Perpetuals are a type of cryptocurrency derivative that have no expiration date. They are designed to closely track the price of the underlying cryptocurrency asset, typically through the use of a funding mechanism. This funding mechanism ensures that the perpetual contract's price stays in line with the spot price of the cryptocurrency. Perpetuals are settled in the same cryptocurrency as the underlying asset, and they allow traders to go long or short on the price of the cryptocurrency without actually owning the asset. On the other hand, futures contracts have a specified expiration date. They are standardized contracts that require the buyer to purchase the underlying asset at a predetermined price on a specific future date. Futures contracts are settled in cash, meaning that physical delivery of the underlying asset does not occur. Futures contracts are often used by traders to hedge against price fluctuations or to speculate on the future price of the underlying asset. In summary, perpetuals are perpetual contracts that have no expiration date and are settled in the same cryptocurrency as the underlying asset. They closely track the spot price of the cryptocurrency and allow traders to go long or short on the price without owning the asset. Futures contracts, on the other hand, have a specified expiration date, are settled in cash, and require the buyer to purchase the underlying asset at a predetermined price on a specific future date.
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• Pedram13May 11, 2024 · a year ago
  Perpetuals and futures are two popular types of derivative contracts in the world of cryptocurrency. While they share some similarities, there are also some key differences between them. Perpetuals, also known as perpetual swaps, are contracts that have no expiration date. They are designed to provide traders with a way to gain exposure to the price movements of an underlying cryptocurrency asset without actually owning the asset. Perpetuals are settled in the same cryptocurrency as the underlying asset and use a funding mechanism to ensure that the contract's price stays in line with the spot price of the cryptocurrency. Futures contracts, on the other hand, have a specified expiration date. They are standardized contracts that require the buyer to purchase the underlying asset at a predetermined price on a specific future date. Futures contracts are settled in cash, meaning that physical delivery of the underlying asset does not occur. One of the main advantages of perpetuals is that they do not have an expiration date, which means that traders can hold their positions for as long as they want. This can be particularly useful for traders who want to take a long-term view on the price of a cryptocurrency. Futures contracts, on the other hand, have a fixed expiration date, which means that traders need to carefully time their entry and exit points. Another key difference between perpetuals and futures is the way in which they are settled. Perpetuals are settled in the same cryptocurrency as the underlying asset, while futures contracts are settled in cash. This means that traders who hold perpetuals will receive or pay out the funding rate on a regular basis, depending on whether they are long or short on the contract. Futures contracts, on the other hand, do not have a funding mechanism. In summary, perpetuals and futures are both derivative contracts in the world of cryptocurrency, but they have some key differences. Perpetuals have no expiration date, are settled in the same cryptocurrency as the underlying asset, and use a funding mechanism to track the spot price of the cryptocurrency. Futures contracts have a fixed expiration date, are settled in cash, and do not have a funding mechanism.
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• Majd SassiJun 23, 2020 · 5 years ago
  Perpetuals and futures are two types of derivative contracts that are commonly used in the world of cryptocurrency. While they both allow traders to gain exposure to the price movements of an underlying cryptocurrency asset, there are some important differences between the two. Perpetuals, also known as perpetual swaps, are contracts that have no expiration date. They are designed to closely track the price of the underlying cryptocurrency asset and are settled in the same cryptocurrency. Perpetuals use a funding mechanism to ensure that the contract's price stays in line with the spot price of the cryptocurrency. This funding mechanism involves the payment of a funding rate, which is used to balance the supply and demand of the contract. Futures contracts, on the other hand, have a specified expiration date. They are standardized contracts that require the buyer to purchase the underlying asset at a predetermined price on a specific future date. Futures contracts are settled in cash, meaning that physical delivery of the underlying asset does not occur. The price of a futures contract is determined by the market and can be higher or lower than the spot price of the underlying asset. One of the main advantages of perpetuals is their flexibility. Because they have no expiration date, traders can hold their positions for as long as they want. This allows them to take a long-term view on the price of a cryptocurrency without having to worry about the contract expiring. Futures contracts, on the other hand, have a fixed expiration date, which means that traders need to carefully time their entry and exit points. In conclusion, perpetuals and futures are both derivative contracts that allow traders to gain exposure to the price movements of an underlying cryptocurrency asset. Perpetuals have no expiration date, are settled in the same cryptocurrency as the underlying asset, and use a funding mechanism to track the spot price of the cryptocurrency. Futures contracts have a fixed expiration date, are settled in cash, and do not have a funding mechanism.
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