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Perpetual futures (perps)

Crypto derivative contracts with no expiry date that track the spot price through a periodic funding payment between longs and shorts.

Perps are the dominant way crypto is traded with leverage. Unlike a futures-contract, there is no contract-month or roll; instead the funding-rate keeps the perp price tethered to spot.

Exchanges offer leverage up to 100x or more, which means liquidation on a 1% move. Most retail losses in crypto derivatives come from this.

Example: you buy $10,000 of BTC perps with $1,000 margin (10x). A 5% rise gains $500; a 5% fall loses $500 and brings you close to liquidation after fees.

Related: funding-rate, liquidation, leverage, futures-contract

See it drawn

Original diagrams for the ideas on this page. Illustrative, not real market data.

Margin and leverageA small deposit controlling a much larger position, and the point at which losses trigger a margin call.Position you controlnotional value $100,000your margin deposit: $5,000$100,000 / $5,000 = 20:1 leverageYour deposit absorbs every dollar of loss$5,000$2,500$0Equity leftMARGIN CALLequity has fallen to $2,5000%1%2%2.5%3%4%5%How far the price moves against you
Margin and leverage. A $5,000 deposit can control a $100,000 position, which is 20:1 leverage. Because the loss is measured on the full $100,000, a 2.5% move against you halves the deposit and brings a margin call, and a 5% move uses all of it.

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