Perpetual futures contracts use a mechanism called funding to keep the price of the contract close to the spot price of the underlying asset. For example, if a BTC/USD perpetual contract is trading at a premium compared to the spot price of Bitcoin, traders who are long will have to pay a small percentage of their position to traders who are short positive funding rate. If the price of the perpetual contract is trading at a discount, the shorts pay the longs negative funding rate. For the sake of this guide, we will use the USDS-denominated futures that are settled in Tether USDT. You can also choose to use USDC as the base currency for perpetual futures. Perpetual futures, a relatively new addition to the world of trading, were first proposed by Robert Shiller in 1992 to enable derivatives for less liquid markets. It wasnt until 2016 that BitMEX introduced perpetual futures contracts to the cryptocurrency market, and since then, their popularity has skyrocketed. Today, these types of futures are available on numerous exchanges, often trading in billions of dollars in volume.
bitcoin perpetual futures