Perpetual futures

In plain English

A perpetual future lets you express a view on an asset’s price without buying that asset and without choosing an expiry date. A long position gains when its closing price is above its entry price; a short position gains when the relationship is reversed. Costs and losses still apply while the position remains open.

The word perpetual describes the contract schedule, not a guarantee that a position can stay open forever. A trader must continue to satisfy the venue’s margin rules.

How it works

A venue defines a market that references an underlying asset such as BTC or ETH. Traders post collateral, choose a direction and position size, and receive derivative exposure rather than ownership of the referenced token.

Because the contract has no settlement date pulling it toward spot, perpetual venues use a funding mechanism or an equivalent design to discourage persistent differences between the contract and its reference price. The exact funding interval, price sources, margin model, and liquidation process vary by venue.

Why it matters

Perpetuals combine continuous exposure with leverage. That makes them flexible, but it also introduces mechanics that do not exist in an ordinary spot purchase: funding payments, maintenance margin, liquidation, and venue-specific pricing rules. A useful trade plan accounts for the whole path from entry to exit, not only the expected price direction.

Worked example

Suppose a trader opens a long position equivalent to 0.10 BTC at an entry price of $60,000. The position’s notional value is $6,000.

If the trader closes at $61,200, the price change is $1,200 per BTC. The simplified trading profit is 0.10 × $1,200 = $120. Fees, funding, price impact, and any change in collateral value must still be included to find the net result.

How it works on Lynx

Lynx perpetuals are synthetic exposures backed by isolated, single-asset liquidity pools. The traded instrument and the collateral or settlement asset can differ: a trader can reference one market while settling fees and PnL in another token.

The underlying traded token does not change hands. Profitable PnL comes from the relevant pool and trader losses are added to it, so Lynx does not behave like a spot trade or a conventional order-book future in every respect.

Common misconception

A perpetual is not a spot asset financed by a simple loan. It is a derivative position governed by the venue’s contract, margin, pricing, and settlement rules.