Perpetual future

Reading depth

Each view includes the earlier layers; the complete engineer or auditor page is shown by default.

BeginnerCore purpose and mental modelPractitionerAdds mechanisms and economicsEngineer or auditorAdds state and verification

Dependency check

Advanced detail assumes prerequisite knowledge

Before using practitioner mechanisms or engineer and auditor checks, review any unfamiliar dependency. These paths come from canonical depends_on relationships; Web3 Academy does not track completed lessons.

Review 5 dependencies

• AssetRequired through Asset versus claim

  1. Perpetual future
  2. Asset versus claim
  3. Asset

• ClaimRequired through Asset versus claim

  1. Perpetual future
  2. Asset versus claim
  3. Claim

• TokenRequired through Asset versus claim

  1. Perpetual future
  2. Asset versus claim
  3. Token

• Asset versus claimDirect prerequisite

  1. Perpetual future
  2. Asset versus claim

• Decentralized exchangeDirect prerequisite

  1. Perpetual future
  2. Decentralized exchange

A perpetual future is a margined derivative that gives long or short price exposure without transferring the underlying asset or having a fixed expiry.

Category: DerivativesDiamond category cue

System record

Start with the economic purpose, participants, resources, and entitlements before studying implementation detail.

Why it exists

Perpetual futures let traders take, hedge, or provide leveraged price exposure continuously without rolling a dated futures contract at each expiry.

Traditional-finance analogy

Futures contract without an expiry date is the closest comparison recorded for this concept.

Where the analogy stops

• Funding or another convergence mechanism replaces scheduled expiry and delivery as the recurring link between perpetual and underlying prices.
• Settlement, margin, counterparty, oracle, insurance, and auto-deleveraging designs differ by venue and can leave traders exposed without owning the referenced asset.

Main actors

• ActorLong trader
• ActorShort trader
• ActorTrading venue or clearing system
• ActorLiquidity provider or counterparty pool
• ActorOracle
• ActorLiquidator or backstop

Assets and claims

Assets — controlled or transformed resources

Assets are resources the mechanism moves, holds, values, or transforms.

• AssetMargin collateral
• AssetSettlement asset
• AssetTrading fees and funding payments

Claims — entitlements and corresponding dependencies

Claims are rights to value, repayment, redemption, control, or another party's performance; each depends on an obligation or system that must honor it.

• ClaimLong or short derivative position
• ClaimProfit-and-loss claim
• ClaimFunding obligation or entitlement

A perpetual future gives long or short price exposure without transferring the referenced asset and without a scheduled expiry.

Why it exists

Perpetuals let traders take or hedge continuous exposure without buying the underlying or repeatedly rolling dated futures. Margin reduces the capital posted at inception, while funding or another convergence rule connects the perpetual market to a reference price over time.

Traditional-finance analogy

A futures contract without an expiry date is a useful analogy. Unlike a dated future, a perpetual has no delivery date that forces convergence. Venue-specific funding, oracle, margin, liquidation, insurance, and backstop rules take that role, and holding the position does not give ownership or governance rights in the reference asset.

Actors, assets, and claims

A long benefits from a higher settlement or exit price; a short benefits from a lower one. Each posts margin to a venue, clearing system, or counterparty pool. An oracle or price-index process supplies reference information. Liquidators, insurance, or backstops handle accounts that cannot meet their obligations.

The margin and settlement token are assets. The long or short position, accrued profit and loss, and funding balance are claims or obligations. The referenced asset may never enter the system.

Step-by-step mechanism

1. Select the market, direction, size, order bounds, and margin mode.
2. Lock or assign collateral and execute against another trader, maker, or pool.
3. Record position size and entry price; update unrealized profit and loss from the venue’s mark rule.
4. Accrue fees and funding under the current interval and sign convention.
5. Restrict risk-increasing orders and withdrawals using margin rules.
6. Close, reduce, transfer, or liquidate the position and realize the resulting balances.

For a simple linear contract quoted in USD:

linearPnlUsd
= signedPositionSizeTokens × (exitPriceUsdPerToken - entryPriceUsdPerToken)

signedPositionSizeTokens is positive for a long and negative for a short. This formula excludes fees, funding, slippage, quanto effects, and model-specific settlement adjustments.

State and flow view

Table: State and flow view

Item	Open	Price move	Close or settlement
Trader collateral	Assigned as margin	Equity changes with PnL, funding, and fees	Residual collateral becomes withdrawable
Derivative position	Long or short claim and obligation created	Remains open at the current marked value	Reduced to zero or transferred
Counterparty account	Opposite trader, maker, or pool takes exposure	Owes gains and receives losses under venue rules	Pays or receives realized settlement
Reference asset	Usually does not move	Supplies a price reference, not settlement assets	Still need not be delivered

Return source and loss allocation

Capital flow is posted margin, fees, funding, and final settlement. Claim flow creates opposite derivative positions. Return flow transfers trading gains from the losing side, counterparty pool, or backstop according to the venue; market price movement itself is not a payer. Risk flow can reach margin, the counterparty pool, insurance, and finally any stated deficit-allocation layer.

Engineer or auditor lens

Test signed size, decimals, entry aggregation, partial closes, reduce-only orders, mark and index selection, funding checkpoints, cross and isolated margin, fee ordering, liquidation, insurance exhaustion, auto-deleveraging, stale prices, paused markets, and repeated settlement. Reconcile every credited profit with an equal debit or explicit pool, insurance, or deficit change.

Hyperliquid’s contract specifications describe one linear, margin-denominated perpetual design and explicitly name its oracle, mark, funding, and margin conventions. Synthetix’s perpetual-trading documentation is another implementation entry point. Neither defines all perpetual markets. Both references were reviewed 2026-08-10.

Common misunderstandings

• “Long a perpetual means owning the token.” It is a price-linked position, not title to the reference asset.
• “Leverage multiplies the market price.” It changes exposure relative to equity and accelerates margin loss; the underlying price still moves by its observed amount.
• “Profit appears from the market.” Settlement requires a counterparty, pool, insurance, or explicit deficit allocation.

Next examine the collateral and loss boundary in derivatives margin.

Machine-readable model

Key equations

Canonical expressions come from the structured concept record. KaTeX renders the notation, while the plain-text expression and variable table keep its meaning and units inspectable without JavaScript. Read the narrative above for the model's domain, assumptions, and rounding rules.

1. Equation 1

   $$\mathrm{linearPnl} = \mathrm{signedPositionSize} \times \left(\mathrm{exitPrice} - \mathrm{entryPrice}\right)$$

   Plain-text equation: linearPnl = signedPositionSize * (exitPrice - entryPrice)

   Variables and units for equation 1

   Symbol	Meaning	Unit
   linearPnl	Linear profit or loss for the position	selected settlement-asset units
   signedPositionSize	Signed Position Size	underlying or reference-asset units
   exitPrice	Exit Price	quote-asset units per base-asset unit
   entryPrice	Entry Price	quote-asset units per base-asset unit

Assurance contract

Security properties

These structured statements define desired behavior. Their stable IDs can bind tests, invariants, specifications, audit findings, or proof results without turning descriptive review advice into an assurance claim.

Desired · not evaluated: No test, audit, or proof result is implied until scoped evidence is linked to this property.

1. SP-01Desired · not evaluated

   Position size, direction, entry price, mark price, collateral, fees, funding, and realized profit and loss reconcile

2. SP-02Desired · not evaluated

   A trader cannot withdraw margin required by initial or maintenance rules

3. SP-03Desired · not evaluated

   Settlement cannot transfer profit without an equal counterparty, pool, or backstop accounting change

4. SP-04Desired · not evaluated

   Oracle, liquidation, insurance, and auto-deleveraging powers and loss priorities are explicit

Prerequisites

Direct dependencies recorded by this concept's canonicaldepends_on relationships.

• Asset versus claimPath 4

  The asset-versus-claim distinction asks whether a token is the resource itself or a right whose value depends on another asset or obligor.

• Decentralized exchangePath 20

  A decentralized exchange is a protocol that coordinates token trades through blockchain transactions rather than a single custodial exchange ledger.

Learn next

Concepts that directly depend on this one, ranked by the recommended learning path. Check each page for additional prerequisites.

• Derivatives marginPath 30

  Derivatives margin is collateral assigned to support open positions, absorb losses, and satisfy initial and maintenance requirements.

• Funding ratePath 31

  A funding rate determines periodic transfers between long and short perpetual positions under a venue-specific price-alignment or skew rule.

• HedgingPath 35

  Hedging adds an offsetting position intended to reduce a specified risk while introducing basis, cost, execution, counterparty, and management risks.

Knowledge check

Quiz

Answer in your own words, then open the model answer.

What problem does Perpetual future exist to address?

Model answer

Perpetual futures let traders take, hedge, or provide leveraged price exposure continuously without rolling a dated futures contract at each expiry.

Mark as understood