Perpetual Futures: What They Are, How They Work, and Why Traders Use Them

When you trade perpetual futures, a type of derivative contract that never expires and settles continuously via funding rates. Also known as perps, they let you go long or short on assets like Bitcoin or Ethereum without ever owning the underlying coin. Unlike regular futures that expire on a set date, perpetuals keep going—making them the go-to tool for crypto traders who want to hold positions for days, weeks, or even months.

What makes perpetual futures so popular? They’re built for volatility. Most crypto exchanges offer up to 100x leverage on perps, meaning you can control a $10,000 position with just $100. But that same leverage can wipe out your account fast if the market moves against you. The system stays balanced through funding rates, periodic payments between long and short traders that keep the perp price close to the spot price. If longs are paying shorts, it means the market is overbought. If shorts are paying longs, it’s a sign of heavy selling pressure. These payments happen every 8 hours and are automatic—no need to manually settle anything.

Perpetual futures aren’t just for speculators. Many DeFi protocols use them to hedge exposure, and arbitrage bots exploit tiny price gaps between perps and spot markets. But here’s the catch: most retail traders lose money on perps. Why? They treat them like lottery tickets—chasing pumps, ignoring risk, and forgetting that leverage cuts both ways. Real traders use stop-losses, position sizing, and funding rate alerts to stay alive. You’ll find posts below that break down exactly how to read funding rates, avoid liquidations, and spot when a perp market is rigged by big players.

These aren’t theoretical concepts. The posts you’ll see here cover real cases: traders who got liquidated on BitHash because they ignored funding rate spikes, users who chased fake airdrops tied to perp trading platforms, and how DeFi liquidity pools like Meteora DAMM v2 are being used to hedge perp exposure. You’ll also see how exchanges like BitOrbit and AstroSwap failed because they didn’t understand the mechanics behind perps—leading to collapsed liquidity and vanished user funds. This isn’t about hype. It’s about understanding the engine driving most crypto trading today—and how to not get crushed by it.