Perpetual Futures and Funding Rates

This lesson covers the single most important instrument in crypto trading: the perpetual future, usually just “the perp.” It is a futures contract with no expiry date, and it accounts for the majority of all crypto trading volume. The puzzle a perp has to solve is how a contract that never settles can still track the spot price, and the answer, the funding rate, is one of the most reliably tested ideas in a crypto interview. We build the perp from an ordinary futures contract, work through a funding payment in numbers, and cover the leverage and liquidation mechanics that make perps powerful and dangerous in equal measure.