A variation of a futures contract, a perpetual futures contract (or perpetual swap) is an agreement between two counterparty traders to buy or sell an asset at a non-specified point in the future. They differ from traditional futures contracts in that there is no contract expiration date, and can accordingly be held in perpetuity. Though proposed in the 1990s to enable derivatives markets for illiquid assets, perpetual futures markets have only developed for cryptocurrencies and are characterized by the availability of high leverage and the use of auto-leveraging, which compels high-leverage traders to forfeit a portion of their gains to cover the losses of the counterparty during periods of high market volatility.
Perpetual Contract
Market Terms
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