Perpetual Contracts: What They Are and How They Shape Crypto Trading

When you trade perpetual contracts, a type of derivative contract that never expires and tracks the price of an underlying asset like Bitcoin or Ethereum. Also known as perps, they let you go long or short without ever having to own the actual coin. Unlike regular futures that expire on a set date, perpetuals keep going—making them the most popular way traders bet on crypto price swings.

What makes them work is the funding rate, a periodic payment exchanged between long and short traders to keep the contract price close to the real market price. If longs pay shorts, it means the market is overbought. If shorts pay longs, the market is oversold. This system keeps things balanced without needing an expiration date. But there’s a catch: leverage. Most platforms let you trade with 10x, 50x, even 100x leverage. That means small price moves can turn into big profits—or wipe out your position fast. That’s where liquidation, the automatic closing of a leveraged position when collateral falls below a critical level comes in. It’s not a feature—it’s a safety net that often feels like a trap when you’re on the wrong side of the market.

Perpetual contracts are the engine behind most crypto trading volume on exchanges like Bybit, Binance, and Thalex. They’re not for beginners, but they’re impossible to ignore if you’re serious about trading. You’ll see them tied to everything from margin trading to DeFi protocols that let you borrow against your holdings. And when things go wrong—like when a token crashes or a platform freezes withdrawals—you’ll often hear about liquidation cascades, funding rate spikes, or traders getting caught in a rug pull disguised as a high-yield perp pool. The posts below dig into exactly how these systems work, where the risks hide, and how to avoid becoming a statistic.