"Futures contract without expiry date"

Perp is the abbreviation of perpetual contract swap (perpetual swap). It is a crypto futures derivative without expiration date invented by Arthur Hayes, the founder of crypto market derivatives exchange BitMEX in 2016. >.

It is mainly similar to futures contracts in traditional finance. It is also a contract in which traders pay a margin to trade future assets, but it has no expiration date. This means thattraders can speculate (long and short) on related assets by increasing leverage without holding any spot, and thus do not need to worry about the delivery risk or storage cost of spot (this is a perpetual The most useful function of a contract and the main goal of its invention).

Three benefits of perpetual contracts

Since the risks are so high, why do traders like perpetual products so much? It has three benefits that traders cannot refuse:

• One is that as we mentioned above, perpetual contracts allow traders to expose themselves without holding an asset. under the asset’s exposure. This solves many problems, because no matter what the market environment is, the holding costs and risks of spot stocks are often higher than imagined.
• The other is that perpetual allows traders to borrow assets they do not actually hold to gamble for higher returns. Such leverage can directly increase capital efficiency, allowing them to trade larger positions with less money (only pledging margin, which is usually much less than the position). But this of course also brings its own unique liquidation risks.
• The last point is that traders can easily short an asset without going through the older process of borrowing from external channels + selling directly + buying spot to repay the money at the right time.

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