Perpetual Futures

The most used derivative in the crypto market is the Perpetual Future. It works similar to a currency swap in traditional financial markets. A key difference is that in a currency swap, there is a well-defined rollover rate based on the interest rates of the currencies involved, but in crypto there are usually no established interest rates for the currencies. Additionally, Perpetual Futures can’t be settled in the underlying currency, which means that there needs to be a mechanism to ensure that the derivative trades in line with the spot market. Finally, as the name implies, Perpetual Futures have no maturity date.

Futures trading is offered by most of the largest exchanges, and trading with them can have many advantages of trading only in the spot market.