What is Perpetual Futures? How It Differs from Regular Futures

What are Regular Futures?

Futures are contracts to buy or sell an asset in the future at a pre-determined price and date. For example, a BTC-MAR25 contract means an agreement to buy BTC in March 2025 at an agreed price. When the contract expires, it settles automatically, and you must open a new position if you wish to continue trading.

What is Perpetual Futures (Perps)?

Perpetual Futures, or Perps, are futures that never expire. You can keep your position open as long as you want without having to "rollover" to a new contract every month. This is the primary format used on Hyperliquid and SiamDEX.

What is Funding Rate?

Funding Rate is the mechanism that keeps the price of perps close to the actual spot price. It works by transferring funds between Long and Short positions, usually every 8 hours:

• Positive Funding Rate (+): Perps price is higher than spot → Longs pay Shorts → This pushes the perps price down.
• Negative Funding Rate (-): Perps price is lower than spot → Shorts pay Longs → This pushes the perps price up.

Funding Rates are typically in the range of 0.01-0.1% per 8 hours. While small, if you use high leverage and the rate stays high, it can significantly impact your profits.

Long vs Short Explained with Real Examples

Long (Betting the price will go up):

• Open Long BTC at $50,000
• Price goes up to $55,000 → Profit $5,000 (10%)
• Price goes down to $45,000 → Loss $5,000 (10%)

Short (Betting the price will go down):

• Open Short BTC at $50,000
• Price goes down to $45,000 → Profit $5,000 (10%)
• Price goes up to $55,000 → Loss $5,000 (10%)

Shorting is the act of "borrowing" an asset to sell it first, then buying it back later at a hopefully lower price. The difference is your profit.

Mark Price vs Last Price vs Index Price

• Index Price: The average spot price from several major exchanges. It represents the "real price" of the asset.
• Mark Price: The price used to calculate PnL and Liquidation on Hyperliquid. It stays very close to the Index Price.
• Last Price: The most recent trade price occurring specifically on Hyperliquid. It may differ slightly from the Mark Price.

Why separate them? If Last Price was used for liquidation, individuals could manipulate the price locally to trigger liquidations. Mark Price, being based on multiple exchanges, is much safer.

Why are Perps Better than Spot for Traders?

• Trade the Downside (Short): Spot markets only profit when prices rise, but perps allow you to profit in both bull and bear markets.
• Leverage: Amplify your profits without needing a massive amount of capital.
• No Asset Ownership Required: Trade Gold or Stocks without needing to physically buy or hold them.
• Instant USDC Profits: You don't need to manually sell your asset back to a stablecoin to realize your profit.