What is a Perpetual Contract?

A perpetual contract (commonly called a "perp") is a derivative instrument that lets you speculate on the price of an asset — like Bitcoin or Ethereum — without actually owning it. Unlike traditional futures contracts, perps have no expiry date, so you can hold your position for as long as you want.

Perps are the most traded instrument in crypto, with daily volumes regularly exceeding spot markets.

How Perps Work

When you open a perp position, you choose a direction:

• Long — you profit if the price goes up
• Short — you profit if the price goes down

You also choose a leverage multiplier (e.g. 5×, 10×, 20×). Leverage lets you control a larger position with a smaller amount of capital. A 10× long on Bitcoin means a 1% BTC price increase gives you a ~10% gain on your margin — but losses are amplified the same way. For a deeper look at leverage mechanics, margin types, and choosing the right multiplier, see our complete guide to leverage in crypto trading.

Funding Rate

Because perps never expire, the contract price needs to stay anchored to the underlying spot price. This is achieved through a funding rate — a periodic payment exchanged between longs and shorts:

• When the perp price trades above spot, longs pay shorts (incentivizing more shorts to bring the price down)
• When the perp price trades below spot, shorts pay longs (incentivizing more longs to bring the price up)

Funding rates are typically settled every 8 hours and are a key cost to factor into any position.

Liquidation

Because you're trading with leverage, your position can be liquidated if the market moves against you and your margin falls below a maintenance threshold. The exchange automatically closes your position to prevent losses from exceeding your collateral.

This is why risk management — position sizing, stop-losses, and not over-leveraging — is essential when trading perps.

Why Perps Dominate Crypto

Traditional futures require settlement: at expiry, you either deliver or receive the underlying asset, or cash-settle the difference. This creates friction and rolling costs for traders who want continuous exposure.

Perps solve this with a simple mechanism (funding rates) that removes expiry entirely. The result:

• Continuous exposure — hold a position indefinitely
• Deep liquidity — perp markets aggregate traders who would otherwise be split across multiple expiry dates
• Capital efficiency — leverage means less capital tied up for the same market exposure

Perps on Ventuals

Ventuals is a decentralized perpetuals exchange. Unlike centralized exchanges, your funds never leave your custody — trades are settled on-chain via smart contracts.

Key advantages of trading perps on a DEX like Ventuals:

• Non-custodial — you hold your own keys
• Transparent — all positions and liquidations are visible on-chain
• Permissionless — no KYC or account required

Ready to trade? Open your first position on Ventuals →