Perpetual futures (aka perpetual swaps or perps) are derivatives that allow you to buy or sell the value of an underlying asset. The reason they’re called “perpetual” is that they have no expiry date, allowing traders to hold a position indefinitely.
Perps enable traders to speculate on the price movements of an asset using leverage.
Funding Rate
Perps often involve a funding rate that adjusts based on market conditions to keep the swap price aligned with the underlying asset price.
The funding rate is a periodic payment between buyers and sellers of the contract, based on the difference between the contract price and the spot price.
Margin Requirements
To keep their positions open, traders need to meet the maintenance margin requirement. It means that they have to maintain a certain balance of their margin account.
If the balance falls below the minimum margin requirement, the trader may face liquidation, where their position is closed automatically to prevent further loss.