What is the difference between perpetual futures and traditional futures in the crypto industry?

3 answers

• shaoDec 02, 2024 · 8 months ago
  Perpetual futures and traditional futures are both derivative financial products in the cryptocurrency industry, but they have some fundamental differences. Perpetual futures do not have an expiration date, while traditional futures have a fixed expiration date. This means that perpetual futures can be held indefinitely, allowing traders to maintain their positions for as long as they want. On the other hand, traditional futures contracts have a specific expiration date, after which they settle and expire. Another key difference is the funding mechanism. Perpetual futures use a funding rate to maintain the price of the contract in line with the spot market. This funding rate is exchanged between long and short positions, ensuring that the contract price closely tracks the underlying asset's price. Traditional futures, on the other hand, rely on the supply and demand dynamics of the market to determine the contract price. Overall, perpetual futures offer more flexibility and continuous trading compared to traditional futures.
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• Shakila RehmatMay 29, 2021 · 4 years ago
  Perpetual futures and traditional futures are two types of financial contracts in the crypto industry. Perpetual futures are designed to mimic the price of the underlying asset, allowing traders to speculate on the future price movements without actually owning the asset. Traditional futures, on the other hand, involve the obligation to buy or sell the underlying asset at a predetermined price and date. One of the main differences between the two is the funding mechanism. Perpetual futures use a funding rate to ensure that the contract price stays in line with the spot market price. This funding rate is exchanged between long and short positions, which helps to prevent the contract price from deviating too much from the spot price. Traditional futures, on the other hand, rely on market forces to determine the contract price. Another difference is the expiration date. Perpetual futures do not have an expiration date and can be held indefinitely, while traditional futures have a fixed expiration date. In terms of trading experience, perpetual futures offer more flexibility and allow traders to hold positions for as long as they want, while traditional futures require traders to manage their positions within the specified time frame.
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• Harsh GuptaMar 21, 2021 · 4 years ago
  Perpetual futures and traditional futures are two popular types of derivative contracts in the crypto industry. Perpetual futures, also known as perpetual swaps, are contracts that mimic the price of the underlying asset and have no expiration date. This means that traders can hold their positions for as long as they want without worrying about contract expiration. On the other hand, traditional futures contracts have a fixed expiration date, after which they settle and expire. Another key difference is the funding mechanism. Perpetual futures use a funding rate to maintain the contract price in line with the spot market price. This funding rate is exchanged between long and short positions, helping to keep the contract price close to the underlying asset's price. Traditional futures, however, rely on market forces to determine the contract price. In terms of trading experience, perpetual futures offer more flexibility and allow traders to hold positions for as long as they want, while traditional futures require traders to manage their positions within the specified time frame. Overall, both perpetual futures and traditional futures have their own advantages and are suitable for different trading strategies.
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