Perpetual contract trading is a crypto futures derivative with no expiration date invented by Arthur Hayes, the founder of the crypto market derivatives exchange BitMEX in 2016. It is a virtual contract product settled in USDT or tokens.



It is mainly similar to futures contracts in traditional finance. It is also a contract in which traders pay a margin to trade future assets. This means that traders can speculate (long and short) on related assets by increasing leverage without holding any spot, and thus do not need to worry about the delivery risk or storage cost of spot. In other words, investors can directly obtain profits from the increase in the price of digital currencies by buying long contracts, or obtain profits from the decline of digital currencies by selling short contracts.

Traditional Contract VS Perpetual Contract

Most futures contracts are traditional contracts with a definite expiration date. If the contract price approaches the spot price near the settlement date, all related positions will expire (i.e. be settled).



In contrast, perpetual contracts have no expiry date. Traders can hold positions permanently and close them at any time. Another key difference is that perpetual contracts are based on an asset’s index price, which is equal to the average price of that particular asset’s spot price and trading volume.

Advantages of Perpetual Contracts

No need to hold spot: Perpetual contracts allow traders to expose themselves to the risk of an asset without holding it. This solves many problems, because no matter what the market environment is, the holding costs and risks of spot stocks are often higher than imagined.




Leverage increases capital efficiency: Perpetual contracts allow traders to trade larger positions with a small amount of margin. Such leverage can directly increase capital efficiency, but of course it also brings its own unique liquidation risks.




Direct short selling: Perpetual contracts are two-way transactions that allow traders to easily short an asset without going through the older process of borrowing from external channels + selling directly + buying spot at the right time to repay the money. Therefore, many traders use perpetual contracts as a common tool to hedge against falling market prices, using them to protect regular transactions from price fluctuations.




Hotcoin provides users with professional perpetual contract trading products with a maximum leverage of 125 times, including two mainstream settlement methods, U-standard and currency-standard, which can meet the needs of different types of users in different scenarios. It is worth noting that due to the liquidation risk caused by leverage, perpetual contract trading has higher risks. Please pay attention to your capital and position control.