⚠︎ Risk warning: leveraged derivatives on unregulated platforms — you can lose everything you deposit. Not investment advice.
Perpetual Futures, Explained
A perpetual future — a "perp" — is a leveraged bet on a price that you can hold indefinitely. It behaves like a futures contract that never expires: you post margin, you go long or short with leverage, and a mechanism called funding keeps the contract's price glued to the real ("spot") price of the underlying asset. Perps are the most-traded crypto derivative by far, and increasingly they exist in two legal worlds — offshore exchanges and, since 2026, EU-regulated venues. This guide covers the instrument; the venue split has its own guide.
The three moving parts
1. Leverage and margin
You deposit collateral (margin) and open a position several times its size: with €1,000 at 10x you control a €10,000 position. Profits and losses are calculated on the €10,000 — so a 1% move in the price is a 10% move in your money, in either direction. Margin comes in two flavors on most venues: isolated (each position has its own collateral; only that collateral is at risk) and cross (your whole balance backs all positions — more efficient, and more dangerous).
2. Liquidation
If the market moves against you far enough that your margin no longer covers the exchange's maintenance requirement, the venue closes your position for you — that is liquidation, and it is the defining risk of perps. At 10x leverage, roughly a 10% adverse move wipes the position; at 50x — common offshore — roughly 2% does. This is why the EU-regulated venues cap retail leverage at 10x and why most experienced traders use far less than the maximum. Regulated venues also document protections here: Kraken's EEA offering, for instance, states an account "can never go below zero" (negative balance protection).
3. Funding — the price anchor
Nothing forces a contract without expiry to trade at the spot price, so perps use funding: at a fixed interval (commonly every 8 hours; hourly on some venues), whichever side of the market is "heavier" pays the other. When the perp trades above spot, longs pay shorts — nudging the price down; below spot, shorts pay longs. Funding is not a fee to the exchange; it flows between traders, and if you hold positions for days it can cost (or earn) more than your trading fees. Every venue documents its own interval and formula — check it before comparing costs across venues.
Where your money actually sits
On a centralized exchange, your margin sits with the exchange — you're trusting a company. Which company matters enormously: an EU MiFID investment firm with a named regulator is a different counterparty from an offshore entity with no licence relevant to you. Our regulated-vs-offshore guide covers that split. The alternative model — trading perps from your own wallet on a decentralized venue — is covered in depth by our sibling site, PerpDEX Guide.
The EU twist: "expiry perps"
Here's a nuance almost nobody explains. The perps offered to EU retail by regulated venues are mostly not open-ended contracts. OKX's X-Perps are contracts with a fixed 60-month expiry that auto-generate a successor; Coinbase's EU contracts run 5-year expiries with hourly funding. They trade and feel like perps — funding anchors them to spot, you never handle a rollover — but structurally they are long-dated futures. For most traders the difference is invisible. If your strategy depends on expiry mechanics or very long holds, read the venue's contract specs: our OKX and Coinbase reviews flag the details, and Kraken's EEA perps use an hourly auto-roll instead.
What perps are for — and not for
Legitimate uses: hedging an existing position (short perps against holdings you don't want to sell), expressing a directional view with defined capital at risk, and earning funding on the less-crowded side of a market. What they are not: a way to turn a small account into a large one quickly. The leverage that makes that arithmetic tempting is the same leverage that liquidates most accounts that try it. Start with the venue reviews, understand liquidation prices before opening anything, and treat the risk disclosure as literal.