The “forever contract” that lets you bet on price without owning the coin.
By now, we’ve talked about wallets, DEXs, staking, liquidity pools, yield farming, real yield, bridging, and gas tokens.
All of those live in the spot world, you buy something, you own it, you hold it.
Today, we step into a different room: the derivatives room.
And the loudest voice in that room?
Something called perpetual futures, or just “perps.”
So, what is a perpetual future or perps?
A perpetual future is a type of trading contract that lets you bet on the price of a coin without actually owning it, and without any expiry date.
In traditional futures, contracts expire, like “BTC price on June 30.”
With perps, there’s no such date. The contract just keeps rolling… forever (as long as you or the exchange keeps the position open).
You’re not buying the coin.
You’re entering an agreement that says,
“I think this price will go up,”
or
“I think this price will go down.”
If you’re right, you gain.
If you’re wrong, you lose.
Long vs short: choose your side
Perps usually come with two buttons: Long and Short.
- Long = you think the price will go up.
- Short = you think the price will go down.
You can open a long position on BTC even if you don’t hold any BTC at all.
You can short ETH even if your wallet has zero ETH.
That’s both the beauty and the danger of perps: you’re playing with price, not just with coins.
Where leverage sneaks in
Perps are often linked to leverage, something we’ll dig into more in the next posts.
For now, here’s the simple idea:
Leverage lets you control a bigger position than the money you put in.
- With 5x leverage, $100 lets you control $500 worth of exposure.
- With 10x leverage, $100 controls $1,000 worth.
If the market moves in your favor, your gains are multiplied.
If it moves against you, your losses are multiplied too.
That’s why many traders say:
“Perps are like hot sauce, a little can make things exciting, too much can ruin everything.”
What keeps perps “connected” to real prices?
If these contracts don’t expire, how do we make sure their price doesn’t drift too far from the real market price (spot)?
That’s where something called a funding rate comes in (I’ll write a full post on this later, but here’s the short version).
- When the perp price is higher than spot, long traders usually pay a small fee to shorts.
- When the perp price is lower, shorts pay longs.
These tiny payments push traders to rebalance, keeping perp prices close to reality.
Think of it like a gentle tug-of-war that keeps the rope in the middle.
Why traders love perps
Perps are popular because they offer:
- Flexibility – you can profit from both up and down moves.
- No expiry – you don’t have to worry about rolling contracts every month.
- Leverage – you can take bigger positions with less capital (with higher risk).
- Hedging – you can protect a spot position. Example: you hold BTC but think price might dip short term, so you open a short perp as protection.
To serious traders, perps aren’t just a way to gamble.
They’re tools to manage risk, express opinions, and react quickly to the market.
Why beginners should be careful
All of this sounds exciting, and it can be.
But here’s the honest part:
Perps are not where most beginners should start.
Spot trading teaches you:
- How price moves
- How your emotions react
- How markets behave
Perps add:
- Liquidations
- Leverage
- Funding rates
- Higher stress
You’re not just learning how crypto moves, you’re learning how you move under pressure.
So if you ever try perps, think of it like learning how to drive:
- Start slow.
- Use small amounts.
- Assume you’ll make mistakes.
- Consider it tuition, not guaranteed profit.
Why perps matter in your understanding of crypto
Even if you never trade them, knowing what perps are helps you understand why crypto markets can move so violently.
When too many traders are:
- Over-leveraged
- On the same side (all long, or all short)
A sudden move can trigger liquidations, forced closing of positions, which pushes prices even further in that direction.
It’s like a row of dominoes falling: one push, many consequences.
Perps are a big reason crypto sometimes moves like a mood swing, fast, emotional, and extreme.
Takeaway
Perpetual futures are like the “no expiry” roller coaster of crypto trading.
They let you bet on price without owning coins…
They offer leverage…
They can amplify gains, and losses.
You don’t need to trade them to be a “real” crypto person.
But understanding them helps you make sense of why this market behaves the way it does.
And sometimes, understanding is more powerful than participating.
Have you ever opened a perp position, even just once, or are you still watching from the sidelines?
Share your experience (or your fears) in the comments. Your story might be the reminder someone else needs.
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