What are the differences between perpetual swaps and futures in the world of cryptocurrency?

1 answers

• Dec 29, 2021 · 3 years ago
  Perpetual swaps and futures are two different types of derivative contracts in the cryptocurrency market. Perpetual swaps are designed to mimic the behavior of a spot market, allowing traders to speculate on the price of an underlying asset without actually owning it. They have no expiration date and can be held indefinitely. Futures contracts, on the other hand, have a fixed expiration date and traders are required to settle the contract at that time. This difference in expiration date can have implications for trading strategies and risk management. Additionally, perpetual swaps often have a funding mechanism that adjusts the contract price to closely track the spot price of the underlying asset. This funding mechanism is absent in futures contracts. Both perpetual swaps and futures have their own advantages and disadvantages, and it's important for traders to carefully consider these factors before deciding which instrument to trade.
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