What is perpetual trading


Perpetual contracts have given the web3 space a much needed instrument to take directional bets and execute hedges in a seamless manner.

A perpetual contract is a derivative product that is similar to a futures contract but has no expiration date. What’s so significant about this versus traditional spot markets or futures can be broken down to 3 main things:

  1. Capital Efficiency via Leverage: The advantage of trading a perpetual contract over a spot contract is that perpetuals offer the trader the ability to trade on margin: Rather than having to fund the full cost of the trade (eg. 10 ETH) , the trader has the option to put down only part of the notional in margin (eg. 1 ETH), opening up capital to be allocated elsewhere

  2. No Requirement to hold Underlying Assets: A perpetual future is a derivative, which means that while the profits or losses of the trade depend on the price of the underlying - like ETH for example, there is no real need to own ETH in order to trade it. As long as there is sufficient collateral provided and a price feed, a perpetual contract can be traded for almost any token.

  3. No Physical Settlement of Underlying Assets: Trades can be held with leverage in perpetuity as long as the trader has sufficient collateral to pay for ongoing fees. There is no physical settlement of the underlying - for example, ETH, as there is no expiration date. This makes trading perpetuals much easier as when a trade is closed, it can be settled straight in USDC on your account, rather than having to deal with multiple tokens or selling the futures before they expire.

All users can leverage their position up to 25x, and you can unlock 100x leverage trading with 300 FLP staked on Fulcrom.

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