Crypto Perpetual Futures Guide: You Can Finally Figure Out All Details

Perpetual futures are now the dominant form of crypto derivatives trading globally. By late 2025, these contracts accounted for more than 90% of all crypto derivatives trading volume, with roughly $80 billion changing hands daily, often exceeding spot markets in activity and liquidity.

We designed this guide to explain how crypto perpetual futures work in practice, not to promote trading or specific strategies. It breaks down core mechanisms such as leverage, funding rates, and liquidation logic in simple terms, so you can better understand how risk and outcomes are formed.

Whether you plan to trade, compare platforms, or simply follow the market, this context helps evaluate perpetual futures more clearly and avoid common misunderstandings.

Understanding Perpetual Futures

What Are Perpetual Futures in Crypto?

Perpetual futures (also known as perps or perpetual swaps) are a type of derivative contract that allows traders to speculate on the future prices of assets. In other words, you’re predicting where a crypto price will go — up or down — and placing a bet. Since it's a derivative, you don't actually buy or store the coins; you just open a trade.

Unlike traditional futures, perpetuals don't have an expiration date. Think of it like a rental agreement: a traditional future is like a lease that ends on a specific day, after which you have to move out.

A perpetual future, however, is like an open-ended lease. You can keep using the flat as long as you keep paying the rent. In the crypto world, this means you can hold your position as long as you want — unless you decide to close it yourself or the exchange liquidates it because you ran out of funds to maintain the position.

How Do Perpetual Futures Work?

Let's break down how perpetual futures work using a simple model.

Imagine the current price of BTC is $87,000

You want to open a trade with $1,000 of your own funds. This means you’ve decided to open a perpetual futures position to bet on the price increasing without actually buying Bitcoin itself.

You could trade using only your $1,000 budget, but the profit might be low. If the BTC price shifts by 3%, you would only earn $30. In the world of crypto trading, that’s basically peanuts.

To earn more, you can use leverage

Leverage is an exchange mechanism that allows you to borrow funds to open a larger position than your initial deposit, amplifying your potential returns. For example, if you apply 10x leverage, your $1,000 position becomes $10,000 (10 times your actual capital).

In professional terms, your $1,000 is called margin. Margin is the collateral you deposit with the exchange to back your trade. Keep in mind: this is your real money at risk, and you cannot lose more than this initial amount.

Now, with that same 3% increase in the price of Bitcoin, your profit is calculated based on the position size ($10,000) rather than your collateral ($1,000). In this case, your profit would be approximately $300. The market movement is exactly the same, but the impact on your capital is fundamentally different.

Ultimately, leverage doesn't generate profit on its own; it simply amplifies the impact of price movements on your trade.

Choosing Your Direction: Long vs. Short

Now you’re ready to open a position. You have two choices:

• Long: A bet on growth (if you think BTC will go up).
• Short: A bet on a decline (if you think BTC will fall).

Let's say you go Long. What happens next?

💡 Read more: How to Trade on DEX: Coin Wallet's Tutorial

Scenario 1: Price rises

The price of BTC rises from $87,000 to $90,000. That’s an increase of $3,000 per BTC, or approximately 3.45%.

Since your total position size is $10,000, your profit is 3.45% of $10,000 = $345. You invested $1,000 and made $345. After closing the position, your total account balance is $1,345.

Scenario 2: Price falls

The price of BTC dropped from $87,000 to $84,000 — a decrease of approximately 3.45%. With your $10,000 position, your loss is roughly $345.

As a result, your $1,000 collateral is reduced by $345, leaving you with $655.

Scenario 3: Liquidation

Liquidation is when the exchange forcibly closes your trade to ensure you don’t lose more than your collateral.

Typically, an exchange requires you to maintain a "maintenance margin." For example, they might require you to keep at least 50% of your initial margin to keep the position open (though these thresholds vary).

In our example, if the price drops by about 10%, your losses would equal your entire $1,000 margin. Before your balance can turn negative, the exchange will liquidate your position. You lose your entire collateral and exit the market.

Traditional Futures Vs. Perpetual Futures

As mentioned earlier, traditional futures always have an expiration date. This means that on a specific day, the trade is automatically closed based on that day’s price, or the trader must "roll" the position over to a new contract.

Additionally, as a traditional contract approaches its expiration, its price naturally converges with the actual market price of the asset. Since perpetual futures never expire, they use a different mechanism to stay tethered to the market price: the Funding Rate.

The Funding Rate is a mechanism designed to keep perpetual futures prices in line with the spot price (the actual market price of the coin). This ensures market stability and keeps different trading products in sync.

For example, the price of Bitcoin is $90,000 on the spot market. Traders guess the BTC price is likely to grow and open a Long deal. Thus, the BTC perpetual price might rise to $90,500. However, you should keep in mind that the price of a perpetual future is the price of the bet on BTC, not the coin price itself. In this case, the funding rate begins regulating prices. The exchange sets limits, and now traders must pay for holding Longs. Consequently, some traders decide to close their Long positions to save money, and the market becomes stable.

However, other traders see that Longs are paying and decide to open Shorts because they can earn money just for keeping their positions open. Thus, one group of Longs leaves, and a new group of Shorts enters. As a result, the market becomes balanced.

When traders open a lot of Short positions, the funding rate works exactly the same way, but vice versa.

Crypto Platforms for Perpetual Futures Trading

What Are the Top Platforms for Trading Crypto Perpetual Contracts

Crypto perpetual contracts can be traded on different types of platforms. Each of them uses its own approach to custody, risk management, and user control. In practice, all services can be grouped into three main categories: centralized exchanges (CEXs), decentralized exchanges (DEXs), and specialized perpetual exchanges.

CEXs

Centralized exchanges such as Binance, Bybit, and OKX are the most common places to trade crypto perpetual contracts.

On CEXs, users trade through accounts managed by the exchange. Funds are held in custody, and most platforms require KYC verification. This means you must confirm their identity before accessing full trading functionality.

Risk management and liquidations are handled centrally. If a position reaches the liquidation threshold, it is closed automatically by the exchange. These processes are fast and efficient, but fully controlled by the platform itself.

Thus, CEXs offer high liquidity and familiar trading tools, but require trust in a centralized operator and acceptance of its internal rules.

DEXs

Decentralized exchanges such as dYdX, GMX, and others allow users to trade perpetual contracts without using a centralized exchange.

💡 Read more: List of Best Decentralized Exchange (DEX) 2025

On DEXs, trades are executed directly from the user’s wallet. There is no KYC, and funds remain under the user’s control at all times. All rules, including margin requirements and position limits, are enforced by smart contracts.

Liquidations do exist on DEXs. However, they are executed automatically according to predefined on-chain logic, not by discretionary decisions of an exchange.

As a result, DEXs prioritize transparency and self-custody, while liquidity and execution speed may differ from centralized platforms.

PERPs exchanges

Perpetual exchanges are platforms built specifically for trading perpetual contracts. Unlike general-purpose DEXs, they don't adapt spot trading infrastructure for derivatives but design the system around leverage, funding rates, and position management from the start.

💡 Read more: Perpetual DEX Crypto Explained: Best Platforms for Low Fees and High Leverage

These platforms often combine wallet-based access with specialized risk models. They aim to keep user control over funds while providing tools optimized for leveraged trading.

Coin Wallet DEX belongs to this category. It focuses on direct wallet interaction and clear, protocol-defined risk rules. Liquidations and margin mechanics are predictable and transparent, which helps users better understand how their positions behave in different market conditions.

On Coin Wallet DEX, you can trade futures with leverage of up to 100× — one of the highest levels available among decentralized platforms. A 100:1 leverage ratio, for example, allows you to control a $10,000 position with just $100 in collateral.

What Are the Best Apps for Managing Crypto Perpetual Positions

Your choice depends on your needs. First of all, you should understand how you plan to trade and what level of risk you are comfortable with. Different apps offer different approaches to leverage, margin management, and liquidation mechanics, and these differences directly affect trading outcomes.

It’s important to evaluate several options available on the market rather than relying on a single platform. Pay attention to how positions are opened and closed, how margin requirements are calculated, and how transparent the liquidation rules are. These details define how the app behaves in real market conditions.

You should also consider your own risk profile. High leverage and complex instruments can amplify both profits and losses, so the app you choose should match your experience level and trading style.

Finally, reading user reviews, exploring documentation, and testing the app with small amounts can help form a practical understanding. Market conditions change, and there is no universal solution. The best app is the one that fits your goals, constraints, and risk tolerance at a given moment.

Simple Rules for Trading & FAQ

Keep in mind, investing is a risk. The following points are not investment advice. They are a general way to think about perpetual trading using basic logic and risk awareness. Perpetual futures are complex instruments, and even simple mistakes can lead to losses if the underlying mechanics are misunderstood.

How to choose and count leverage?
In practice, leverage should be calculated based on how much of your capital you are willing to risk in a single trade. If a small market move against your position can lead to liquidation, the leverage is likely too high for the current setup.

How to avoid liquidation in crypto trading?
To reduce liquidation risk, traders usually keep leverage at a level where normal price fluctuations don't immediately threaten the position. Adding margin, reducing position size, or exiting early are practical ways to manage this risk.

In simple terms, if a position requires constant monitoring to survive small price movements, the risk is already too high.

Risks of perpetual futures trading
Perpetual futures combine leverage, volatility, and time-based costs. This means losses can occur quickly and compound faster than in spot trading. The main risks include liquidation, sudden price movements, funding costs, and technical or execution issues on the platform itself. These risks cannot be removed, only managed.

Frequently Asked Questions

Are perpetual futures legal in the US?

Yes — but with important conditions. Traditionally, perpetual futures (crypto derivatives without expiry dates) were largely unavailable to U.S. retail traders through regulated exchanges because of strict rules governing derivatives markets in the United States.

The U.S. derivatives regulator, the Commodity Futures Trading Commission (CFTC), oversees futures and similar derivatives under the Commodity Exchange Act, and any such trading in the U.S. typically must occur on a CFTC-regulated platform.

Can I trade crypto perpetuals with leverage on US-based platforms?

On a technical level, Coin Wallet DEX is a decentralized protocol that works directly through a crypto wallet and doesn’t require account registration or KYC. This means there are no built-in geographic restrictions enforced by the platform itself.

However, US regulations around derivatives trading are strict. Even if access is technically possible, users remain responsible for understanding and complying with local laws.

Which crypto exchanges offer low-fee perpetual futures trading?

Centralized exchanges such as Binance, Bybit, and OKX often offer competitive maker and taker fees, especially for high-volume traders. However, fees are only one part of the total cost, which may also include funding rates and withdrawal fees.

Decentralized platforms like dYdX or GMX may have different cost structures, where fees are combined with on-chain execution costs and funding mechanisms.