What are Perpetual Futures?
A perpetual futures contract is a financial derivative product similar to a traditional futures contract, where:
- there is no expiry or settlement.
- it is similar to a margin-based spot market and generally trades close to the underlying reference Spot Index Price. The primary mechanism to tether to the spot market price is Funding.
There are a few key components a trader needs to pay attention to when trading Perpetual Futures:
- Marking Method: The Perpetual Contract is marked according to the Fair Price Marking Method. This Method determines the Unrealised PnL and Liquidation Price.
- Initial Margin and Maintenance Margin: These determine how much leverage a trader can trade with and at what point liquidation will occur.
- Funding: This is a periodic payment exchanged between the buyers and sellers every 8 hours. If the funding rate is positive, then buyers will pay and sellers will receive the rate, and vice versa when the rate is negative. You will only pay or receive the funding if you hold a position at the funding timestamp at 08:00 UTC, 16:00 UTC, and 24:00 UTC.
Coincall provides linear perpetual contracts denominated in USDⓈ, allowing traders to use USDT as collateral to go long or short contracts and profit from the rise or fall in cryptocurrency prices. The maximum leverage varies for different currencies, with the highest leverage being 50x.
Using the BTCUSD perpetual contract as an example, the contract details are as follows:
|Index Reference||BTC/USD index|
|Contract Size||0.001 BTC|
|Quoted||Quoting at USD price of 1 BTC|
|Minimum Price Increment||0.1 USD|
|Funding Interval||Every 8 hours (08:00 16:00 24:00 UTC)|
For more information on Coincall's perpetual contracts, please visit this page: here
- Coincall perpetual futures contracts are forward contracts, with quotes, margins, and settlements all denominated in USDⓈ for simplicity and clarity.
- Perpetual contracts have no expiration or delivery date.
- The maintenance margin ratio is the minimum margin required to maintain current positions. When the margin ratio falls below the maintenance margin ratio, forced liquidation will occur. Coincall implements a tiered maintenance margin ratio system, with larger positions requiring higher maintenance margin ratios and lower maximum leverage ratios available to users.
- Since perpetual contracts have no expiration or delivery date, a funding mechanism is used to anchor contract prices to spot prices. Funding fees are charged daily for every 8 hours at 08:00, 16:00, and 24:00 UTC. Users only need to pay or receive funding fees if they hold positions at those times. No funding fees are required if the position is closed before the funding fee is charged.