What is a Perpetual Swap? Main Differences from Futures Contracts

Perpetual swap is one of the most popular types of derivatif mata uang kripto among traders. If you want to understand what perpetual is and how it works, the first step is to distinguish perpetual from traditional futures contracts. Both have similar mechanisms, but there are fundamental differences that will affect your trading strategy.

Perpetual Has No Expiration Date — What Does This Mean?

The most noticeable difference between perpetual swaps and expiring futures contracts lies in the flexibility of duration. Expiring futures contracts are designed with a predetermined expiration date, meaning your position will be automatically closed at a certain time, regardless of market conditions.

In contrast, perpetual has no expiration limit. Traders can maintain their positions as long as their account has sufficient margin to cover losses and prevent liquidation. This gives you the freedom to hold a position indefinitely, as long as risk management is properly maintained. Consequently, you are fully responsible for risk management and deciding when to close your position.

Funding Fees: The Mechanism That Keeps Prices Stable

Since perpetual swaps do not have an expiration date like futures contracts, the market requires a special mechanism to prevent drastic price deviations. This is where the role of funding fees becomes crucial.

Funding fees are payments exchanged between the party opening a long position (buyer) and the party opening a short position (seller). Note that this is not a fee charged by the exchange, but a transfer of value between traders. The funding rate fluctuates based on market supply and demand. When more traders open long positions, the funding rate usually becomes positive, and buyers pay sellers. This mechanism is designed to keep the perpetual price aligned with the spot price of the asset in the market.

Choosing Between Perpetual and Expiring Contracts

Each type of derivative contract has its own advantages depending on your trading style and goals. Expiring contracts are more suitable for traders who want to make short-term transactions or follow time-bound strategies. Perpetual offers greater flexibility and is ideal for traders who want full control over the duration of their positions and focus more on long-term analysis.

Understanding these differences is essential before starting to trade derivatives. Perpetual provides maximum flexibility but also requires disciplined risk management to avoid liquidation.