What are the differences between perpetual and standard futures in the world of cryptocurrency?

3 answers

• Dec 28, 2021 · 3 years ago
  Perpetual futures and standard futures are both popular trading instruments in the world of cryptocurrency. However, there are several key differences between the two. Perpetual futures do not have an expiration date, which means they can be held indefinitely. On the other hand, standard futures have a fixed expiration date, after which the contract is settled. Another difference is the funding mechanism. Perpetual futures use a funding rate to ensure the contract's price stays close to the underlying asset's price. This funding rate is exchanged between long and short positions to maintain balance. Standard futures, on the other hand, do not have a funding mechanism. Additionally, perpetual futures often have a funding rate that is influenced by market demand and supply. This means that during periods of high demand, the funding rate can be positive, resulting in long positions paying short positions. Conversely, during periods of low demand, the funding rate can be negative, with short positions paying long positions. Overall, perpetual futures offer more flexibility and do not require traders to constantly roll over their positions. However, they also come with the risk of funding rate fluctuations. Standard futures, on the other hand, provide a fixed expiration date and do not have a funding mechanism, making them more straightforward to trade.
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• Dec 28, 2021 · 3 years ago
  Perpetual futures and standard futures are two different types of derivative contracts in the world of cryptocurrency trading. Perpetual futures are designed to mimic the spot market, allowing traders to hold positions indefinitely without the need for expiration dates. On the other hand, standard futures have a fixed expiration date, after which the contract is settled. One key difference between the two is the funding mechanism. Perpetual futures use a funding rate to ensure that the contract's price closely tracks the underlying asset's price. This funding rate is exchanged between long and short positions to maintain balance. Standard futures, on the other hand, do not have a funding mechanism and rely solely on the market forces of supply and demand. Another difference is the trading fees. Perpetual futures typically have a funding fee that is exchanged between traders, while standard futures have a fixed fee structure. In terms of trading strategies, perpetual futures are popular among traders who want to hold positions for longer periods of time, as they do not have an expiration date. Standard futures, on the other hand, are often used by traders who prefer shorter-term trading strategies. Overall, the choice between perpetual and standard futures depends on the trader's trading style, risk tolerance, and investment goals.
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• Dec 28, 2021 · 3 years ago
  Perpetual futures and standard futures are two types of futures contracts commonly used in cryptocurrency trading. Perpetual futures, also known as perpetual swaps, are designed to mimic the spot market and do not have an expiration date. On the other hand, standard futures have a fixed expiration date, after which the contract is settled. One key difference between the two is the funding mechanism. Perpetual futures use a funding rate to ensure that the contract's price closely tracks the underlying asset's price. This funding rate is exchanged between long and short positions to maintain balance. Standard futures, on the other hand, do not have a funding mechanism. Another difference is the trading fees. Perpetual futures often have a funding fee that is exchanged between traders, while standard futures have a fixed fee structure. In terms of trading volume and liquidity, perpetual futures are usually more liquid compared to standard futures. This is because perpetual futures can be traded continuously without the need for expiration dates, attracting more traders and market participants. Overall, the choice between perpetual and standard futures depends on the trader's trading strategy, risk appetite, and preference for holding positions long-term or short-term.
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