A Perpetual Contract is a financial derivative product similar to a traditional Futures Contract, while:
- There is no expiry or settlement.
- A Perpetual Contract is similar to a margin-based spot market and generally trade close to the underlying reference Spot Index Price. The primary mechanism to tether to the spot market price is Funding.
Differences Between a Perpetual Contract and a Traditional Futures Contract
| Assignment |
Perpetual Contract |
Traditional Contract |
| Margin |
USDT & Other Currencies |
Mainstream Currencies |
| Settlement Date |
None |
Week/Month/Seasonal |
| Leverages |
10X、20X、50X、100X |
20X |
| Contract Loss Mechanism |
Auto-Deleveraging (ADL) |
Account allocation |
| Liquidation Price |
Fair price index |
Recent transaction price |
| Price Balancing Mechanism |
Funding rate |
Regular delivery |
Market Mechanism of Perpetual Contract
There are a few key components a trader needs to pay attention to when trading the Perpetual Contract:
- Marking Method: The Perpetual Contract is marked according to the Fair Price Marking Method. This Method determines Unrealised PNL and Liquidation Price.
- Initial Margin and Maintenance Margin: These two determines how much leverage a trader can trade with, and at what point the liquidation occurs.
- Funding: This is a periodic payment exchanged between the longers and shorters every 8 hours. If the funding rate is positive, then longers will pay and shorters will receive the rate, and vice versa if the rate is negative. You will only pay or receive the funding if you hold a position at the funding timestamp, i.e., 04:00 (UTC+8),12:00 (UTC+8) and 20:00 (UTC+8).
*You only need to pay or charge the funds if you hold the position at the time stamp of the funds.
- Funding Time Stamp：04:00(UTC+8),12:00(UTC+8) and 20:00(UTC+8).
The current funding rate can be found on the trading page of each Perpetual Contract, as well as in the individual “Contract Specifications” page. Historical rates can be found: https://oceanex.pro/information/funding
