Key fact: A perpetual contract is a crypto derivative with no expiry date. It tracks the spot price through a funding rate exchanged between long and short positions, typically every 8 hours.
How a perpetual contract works
A perpetual contract, or perp, is a crypto derivative that tracks an asset’s price with no expiry date, so you can hold a leveraged long or short indefinitely. Unlike a dated future, it never settles; instead, a funding rate paid between longs and shorts keeps the perp price anchored to spot. Perps are the most traded crypto derivative, valued for their flexibility and high leverage.
Worked example
You open a long perp on Bitcoin with leverage. There is no expiry, so the position stays open as long as your margin holds. Every eight hours you pay or receive funding depending on whether the perp sits above or below spot. If the price falls against you toward your liquidation level, the position is force-closed, exactly like a margin call on any leveraged trade.
Perps versus CFDs on Volity
A perp and a crypto CFD both give leveraged price exposure without owning the coin; the difference is the costing mechanism. Perps use funding; CFDs use spread and overnight financing. On Volity, crypto CFDs let you go long or short with retail leverage capped at 2:1 under CySEC rules, with negative balance protection capping the worst case at your deposit, a regulated alternative to an offshore perp.
Why it matters
Perps offer endless, high-leverage exposure, but funding and liquidation make them costly and unforgiving, which is why they account for many of crypto’s biggest blow-ups. Understand funding and size small. Related: funding rate and leverage.
Learn more in our crypto trading guide.
