Perpetual contracts (background)
11 min
Perpetual futures — a position on the price rather than ownership of the asset. Where most crypto volume happens, and where beginners most often lose money quickly.
What a perpetual contract is
Perpetual contract (“perp”)
An agreement whose value tracks an asset's price, with no expiry date. You never own the asset. You hold a position, and it settles in the quote currency.
Go long BTC-PERP and you profit if BTC rises. There is no BTC to withdraw — there never was any. Because you are not buying the asset, you do not have to fund its full value.
Margin
The money you post to open and hold a position. It is collateral, not a purchase.
Leverage
The ratio between your position size and your margin. At 20×, 1,000 of margin controls 20,000 of exposure.
Leverage, with the arithmetic
Example — 20× long
Margin 1,000 USDT Leverage 20× Position 20,000 USDT (0.25 BTC at 80,000) BTC +1% → +200 USDT → +20% on your margin BTC −1% → −200 USDT → −20% on your margin BTC −5% → −1,000 → margin gone, position closed for you
Leverage does not improve your judgement. It multiplies whatever edge you have, including a negative one, and it shortens the distance between you and being wrong.
Liquidation is not a warning
It is your position being closed at market, automatically, usually at the worst possible moment. There is no call, no grace period, and no appeal. Assume it will trigger at the exact price that would have reversed.
Mark price
Venues do not liquidate on the last traded price. A single large order could push the last price briefly and wipe out thousands of positions unfairly.
Mark price
A fair price computed from an index of several venues. Liquidations are calculated against this, not against the last trade on this venue.
Example — why the numbers disagree
Last price on this venue 79,400 (a brief wick down) Mark price (index) 79,910 Your liquidation 79,500 You are NOT liquidated. The wick did not reach the mark.
When you are close to your liquidation level, watch mark, not last. It is the number that decides.
Funding
A perpetual never expires, so nothing naturally pulls its price back toward spot. Funding does that job.
Funding rate
A small payment exchanged between longs and shorts every few hours. If the perp trades above spot, longs pay shorts. If below, shorts pay longs.
Example — the cost of holding
Position 20,000 USDT long
Funding +0.01% every 8 hours
You pay 2.00 USDT every 8 hours
6.00 USDT per day
~180 USDT per month
That is 18% a year on your 1,000 of margin, before the price does anything at all.Funding is also a signal
Persistently high positive funding means longs are paying to stay in. That is what a crowded trade looks like shortly before it unwinds.
Spot against contracts
| Spot | Perpetual contract | |
|---|---|---|
| You own | The asset | Nothing — a position on its price |
| Maximum loss | What you paid | Your margin, and quickly |
| Leverage | None by default | Typically 20–50× |
| Liquidation | Cannot happen | Automatic, at the mark price |
| Cost of holding | None | Funding, every few hours |
| Profit from a fall | Only by selling holdings | Yes — open a short |
| Good first trade | Yes | No |
Does OpeniBank offer contracts?
No — and this lesson is why
Both OpeniBank venues are spot only: no leverage, no margin, no liquidation. You cannot lose more than you put in here. This lesson exists so you can recognise the risks of perpetuals on venues that do offer them.
Real perpetuals need an index feed, a funding mechanism, an insurance fund, and a liquidation engine that behaves correctly in a fast market. Each is fine until the day it is not. If OpeniBank ever offers them, it will be after each of those has been built and audited — and this page will say so.
What you should take away
- A perp is a position on a price, not ownership of an asset.
- Leverage multiplies your edge in both directions, including when it is negative.
- Liquidation is automatic and uses the mark price, not the last trade.
- Funding is a running cost or income, separate from price movement.
- OpeniBank is spot only. Learn on spot first; there is no hurry.