In plain English
What Perpetual futures means
A perpetual future behaves like a futures contract without a fixed expiration. Because it does not naturally converge at settlement, exchanges use a funding mechanism that transfers money between long and short traders. That mechanism is designed to keep the contract price close to the spot price of the underlying asset.
Why it matters
Perpetual futures are widely used for speculation and hedging because they can be held without rolling to a new expiry date. The absence of expiry changes how price tracking, margin, and carry costs work compared with standard futures.
Example
If BTC spot trades at $100,000 and the perpetual contract trades above that level, the funding rate may be positive, meaning longs pay shorts. The simplified example assumes a 1:1 contract reference and ignores fees and margin requirements.
Quick answers
Common questions
Do perpetual futures expire?+
No. That is the defining feature that distinguishes them from standard futures contracts with set expiration dates.
Why do perpetual futures use funding?+
Funding helps keep the perpetual contract price close to the spot price by incentivizing one side of the market to pay the other.
Sources