Perpetual swaps have become a popular tool in cryptocurrency trading due to their unique features. Unlike traditional futures contracts, perpetual swaps do not have an expiry date, allowing traders to keep their positions open for as long as they want.
This flexibility is made possible by the funding rate mechanism, which ensures that the contract price remains close to the real market price. The funding rate works by charging a fee to traders who hold long positions when the perpetual price is higher than the spot price, and vice versa.
There are different types of perpetual swaps available, including USDT-margined contracts, coin-margined contracts, and inverse contracts. Each type has its own characteristics, such as how profits and losses are calculated, which can impact risk, volatility exposure, and trading strategies.