General Intro about Perpetual Futures
Perpetual futures are futures contracts with no expiration date. The “perpetual” status is maintained by paying/receiving the funding fee.
- Hedging and risk management: traders can use perpetual futures to hedge positions
- Leverage: Perpetual Futures do not require traders to post 100% of collateral as margin. Therefore, trading perpetual futures is more capital efficient.
- No need to own the underlying asset: the payoff of the perpetual futures is based on the underlying asset, such as BTC, but traders do not need to own the underlying asset itself. Any profits and losses will be settled directly in settlement tokens.
- Ability to trade both directions: traders can buy (long) or sell (short) perpetual futures, so they can profit from both rising and falling prices. This is not possible with spot trading.
The “External Custody” feature allows traders on Deri Protocol to use other tokens than stable coins as collateral. Refer to table 1 for base tokens that can be used to trade Perpetual Futures on Deri Protocol.