Perpetual futures: what they are, how funding works and how they differ from dated futures
Learning to trade · · 7 min
Perpetual futures are contracts on an asset's price difference with no expiry date: a position can be held indefinitely. Funding — regular payments between longs and shorts, every 8 hours by default on Binance — keeps the contract price near the asset price. They trade on margin with leverage and carry the risk of losing money, up to the whole margin.
By Viktor Skrin
In short: dated and perpetual futures
| Feature | Dated futures | Perpetual futures |
|---|---|---|
| Expiry date | yes: the contract settles on expiry day | no: a position can be held with no end date |
| What keeps the price near the asset | at expiry the contract price converges with the asset price | funding: regular payments between longs and shorts |
| Cost of holding a position | rolling into the next contract and the price gap between them | funding every few hours, in either direction |
| Where it mostly trades | derivatives exchanges | crypto exchanges |
| Price used for liquidation | set by the exchange's rules | on Binance, the mark price |
What is a futures contract in simple terms?
A futures contract is an agreement to buy or sell an asset at a price the parties agree on now, with settlement later. The buyer (long) gains if the asset's price rises, the seller (short) if it falls. Often the asset itself never changes hands: the parties settle the price difference in cash.
You do not pay the full value of a futures position, you post collateral — margin. The margin is smaller than the position, and that is leverage: profit and loss are counted on the whole position, not on the margin. How leverage sets the liquidation price and why it makes losing the whole margin easy is covered in the article on leverage and liquidation. This article is about how a perpetual contract differs from a classic one.
How do perpetual futures differ from dated futures?
A dated futures contract has an expiry date. On that day it settles, and its price equals the asset's price: the two can drift apart before, but they meet on settlement day. Anyone who wants to hold longer closes the expiring contract and opens the next one. This is called a rollover, and the price gap between the two contracts becomes a cost or a gain.
A perpetual futures contract, or "perp", has no expiry. The position lives until its owner closes it or the exchange liquidates it. But without a settlement date the contract price has no point where it must meet the asset price. To keep the contract from drifting away from the asset, exchanges introduced funding.
How does funding keep a perpetual contract near the asset price?
Funding is a series of regular payments between holders of long and short positions. Binance's rules from its funding rate FAQ (checked 23 October 2026):
- when the rate is positive, longs pay shorts; when it is negative, shorts pay longs;
- by default payments happen every 8 hours, at 00:00, 08:00 and 16:00 UTC, and the exchange may change the interval in extreme volatility;
- the exchange takes no fee on funding, the money moves directly between traders;
- the payment equals the position's notional value times the rate;
- the rate combines an interest component (0.01% per 8 hours by default) and a premium index — the gap between the contract price and the asset's index price.
The logic is simple. If the contract trades above the asset, the rate rises, holding a long becomes more expensive and a short earns payments. More traders want to sell, and the contract price comes back to the asset. It works the same way in reverse.
A hypothetical example, not the result of a real account. Margin of $1,000, leverage of 10, a notional position of $10,000, a funding rate of 0.01% per period. The payment is $1 per 8 hours, about $3 a day. The key point is that it is charged on the notional, not on the margin: relative to the margin it is 0.1% per period. The higher the leverage and the longer the position stays open, the more funding shows in the final result.
What is the mark price and why does it matter?
The mark price is the contract's calculated fair price. According to Binance's FAQ (checked 23 October 2026) it is derived from the last traded price, the best bids and asks in the order book, the funding rate and the price index. The price index is a weighted average spot price of the asset across several exchanges, and the exchange may change its components without notice.
Unrealized profit and loss and the liquidation level are calculated from the mark price. That way a single sharp spike on one venue does not close everyone's positions at once. The practical takeaway for a trader: compare your liquidation level with the mark price, not with the last trade on the chart.
Where liquidation levels of other traders' positions are estimated to cluster is shown on the model-based liquidation map. It is an estimate, not exchange data: how to read it is explained in the article on the bitcoin liquidation heatmap.
Which assets do perpetual contracts cover?
Perpetual contracts started on crypto exchanges, and most of them are on cryptocurrencies. Today they exist on other assets too: for example, the Sufics earnings calendar measures price reactions to reports using hourly candles of Binance perpetual contracts on US stocks.
The holder of such a contract does not own the asset itself: they hold an agreement on the price difference. Trading hours, allowed leverage and funding rules differ by contract — they are in the exchange's specification, and it is worth reading before the trade, not after.
What are the risks of perpetual futures for beginners?
- Leverage multiplies the loss. With leverage of 10, a price move of roughly 10% against the position wipes out the whole margin — a rough guide that ignores fees and maintenance-margin rules; in practice liquidation comes earlier.
- Funding adds up. Each payment is small, but a position held for weeks pays dozens of times.
- Liquidation does not wait for your stop. The exchange closes the position at the mark price when the margin runs out, even if your stop-loss is further away.
- The market never closes. A perpetual contract moves at night and at weekends, when you are not watching.
- The exchange sets the rules. The funding interval, index components and leverage limits can change, and this is not always announced in advance.
Trading futures carries the risk of losing money, including the entire margin. This article explains how the instrument works and is not investment advice.
How does leverage show in Sufics trades?
In the closed-trades feed on the home page every position shows its leverage, and the result percentage is the price move multiplied by the leverage — a percentage of the position's margin, not of a client's account. Minus 30% on a trade does not mean minus 30% of the account, and a gain on a trade is not an investor's return either. How to tell a trade's result from an account's result is covered in the article on maximum drawdown.
If you are choosing a manager who trades futures, ask what leverage they use, how they limit position size and how they measure drawdown by account rather than by trades. The other questions are in the checklist on how to check a fund manager. Past results of any manager do not guarantee future ones.
Key takeaways
- Dated futures have an expiry date, perpetual futures do not.
- Funding keeps a perpetual contract near the asset price: when the rate is positive, longs pay shorts.
- Funding is charged on the position's notional, not on the margin, so leverage makes it bigger.
- On Binance liquidation is based on the mark price, not the last trade.
- Leverage multiplies the loss: with 10x, a move of about 10% against the position wipes out the margin.
Frequently asked questions
What are perpetual futures in simple terms?
They are futures contracts with no expiry date. A position stays open until its owner closes it or the exchange liquidates it, and funding payments keep the contract price close to the asset price.
How do perpetual futures differ from dated futures?
Dated futures have a settlement date when their price converges with the asset's; holding longer means rolling into the next contract. Perpetual futures have no date, and regular funding payments keep the price near the asset.
Who pays funding to whom?
Under Binance's rules, when the rate is positive, holders of long positions pay holders of short ones, and the reverse when it is negative. The exchange takes no fee on these payments, which happen every 8 hours by default.
What amount is funding charged on?
On the position's notional value, not on the margin. With leverage of 10 and a rate of 0.01% per period, the payment equals 0.1% of the margin each period.
What is the mark price?
The contract's calculated fair price. Binance derives it from the last trade, the best bids and asks, funding and an index of spot prices across several exchanges, and uses it for unrealized profit and loss and liquidation.
Are perpetual futures suitable for beginners?
They are a leveraged instrument that trades around the clock: a loss can exceed expectations, and liquidation closes the position before the stop-loss. Trading futures carries the risk of losing money, so start by understanding leverage and position size.
