Perpetual Contract

Contract

A perpetual contract represents a derivative instrument, primarily observed within cryptocurrency markets, that replicates the payoff profile of a traditional futures contract without a predetermined expiry date. These contracts derive their value from an underlying asset, such as Bitcoin or Ethereum, and allow for continuous trading. The core mechanism involves an “inverse contract,” where the contract price typically trades at a discount to the spot price of the underlying asset, facilitating arbitrage opportunities and price discovery. Consequently, perpetual contracts offer traders extended exposure and flexibility compared to contracts with fixed expiration dates.