# Futures Contract Design ⎊ Area ⎊ Resource 3

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## What is the Contract of Futures Contract Design?

Futures contract design defines the specific parameters of a standardized agreement to buy or sell an asset at a predetermined price on a future date. In cryptocurrency markets, this design includes both traditional expiration-based futures and perpetual futures, which lack a fixed expiration date. The contract structure dictates the rights and obligations of both the long and short parties, providing a framework for price discovery and risk transfer.

## What is the Specification of Futures Contract Design?

The specification of a futures contract details critical elements such as the underlying asset, contract size, tick size, and margin requirements. For crypto derivatives, the design often includes specific mechanisms like funding rates for perpetual futures, which align the contract price with the spot price. These specifications are crucial for market participants to accurately calculate leverage, risk exposure, and potential profit or loss.

## What is the Settlement of Futures Contract Design?

Settlement in futures contract design determines how the contract is resolved upon expiration or closure. Physical settlement involves the actual delivery of the underlying asset, while cash settlement involves the exchange of cash based on the difference between the contract price and the final settlement price. The choice of settlement method significantly impacts the liquidity and operational complexity of the derivatives market.


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## [Order Book Design Challenges](https://term.greeks.live/term/order-book-design-challenges/)

## [Order Book Architecture Design](https://term.greeks.live/term/order-book-architecture-design/)

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**Original URL:** https://term.greeks.live/area/futures-contract-design/resource/3/