Perpetual contracts are derivative contracts that are settled in USDT (linear contracts) or the underlying currency they are being traded in (inverse contracts). Traders can use perpetual contracts to benefit from the upwards or downwards movement of a cryptocurrency by opening long or short contracts just like in futures.
However, there are a few key differences between futures and perpetual swaps:
- There is no expiration date or settlement date. Traders don’t need to keep track of delivery months and can open a position in perpetuity for as long as they want (unless they get liquidated)
- Perpetual Contracts are tied to margin-based spot market and trade in reference to the Index Price of the asset.
- Since there is no expiration date, perpetual contracts use a funding fee mechanism to anchor the contract price to the spot price.
(Please note that Futures Contract often trade at different prices compared to the spot market)
Each contract has four core concepts:
How Do I Read Contract Symbols?
BITFLEX uses contract symbols to save time and effort traders put into trading an asset e.g., BTCUSDT-P. All our contracts are abbreviated into a specific format mentioned below.
- The first half of each contract represents the asset that is being traded e.g., Bitcoin (BTC), Ethereum (ETH), and so on.
- The second half of the contract represents the quote currency e.g., USD Tether (USDT), and so on.
- The last part of the contract represents the nature of the contract, in this case P represents Perpetual Contract