Glossary · DeFi
Perpetual future
Also: perp, perps, perpetual futures, perpetual swap
A perpetual future is a derivative that tracks an asset's price with no expiry date, kept in line with spot by periodic funding payments between long and short holders.
Related terms
- Funding rate
- The funding rate is the periodic payment exchanged between holders of long and short perpetual futures positions, paid by longs to shorts when the perpetual trades above spot and in the opposite direction when it trades below.
- Delta neutral
- A delta neutral position is one constructed so that its net sensitivity to the underlying asset's price is approximately zero, leaving its return to come from funding, fees or basis rather than from price direction.
- Basis trade
- A basis trade is the combination of a long spot position and a short derivatives position in the same asset, earning the spread between the two prices while carrying little direct exposure to the price itself.
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