A Perpetual Contract is a derivative product similar to traditional Futures Contract.
It has no expiry or settlement date.
It has a Funding Rate that occurs every 8 hours. Traders who hold a position over the funding timestamp either pay or receive funding.
Mechanics of a Perpetual Contract Market
When trading perpetual contracts, a trader needs to be aware of several mechanics of the market:
- Faire Price Marking: Perpetual Contracts are marked according to the Fair Price Marking method. The Mark Price determines Unrealized PNL and liquidation prices.
- Initial and Maintenance Margin: These key margin levels determine how much leverage one can trade with and at what point liquidation occurs.
- Funding: Periodic payments exchanged between the buyer and seller every 8 hours. If the rate is positive, then longs will pay and shorts will receive the rate, and vice versa if the rate is negative. Please be noted that the traders will only pay or receive funding if they hold a position at the Funding Timestamp.
- Funding Timestamps: 04:00 UTC, 12:00 UTC and 20:00 UTC.