Perpetual futures are moving onshore in the United States. In 2026, the crypto market’s most heavily traded derivative is entering regulated U.S. venues, putting the focus back on the mechanics that define the product: no expiry, funding rates, and liquidation.
A perpetual future, often called a perp, is a derivative that lets traders take long or short exposure to an asset without owning it directly. Its defining feature is simple: the contract does not expire. A position can stay open as long as the trader keeps enough margin in the account. That removes the rollover problem found in traditional futures and helps explain why perps became the dominant trading instrument across crypto markets.
How funding keeps perp prices tied to spot
Removing expiry creates a problem. In traditional futures, the settlement date pulls the contract price back toward spot as expiration approaches. Perps need a different anchor, and that anchor is the funding rate. The payment is typically exchanged every eight hours, flowing directly between longs and shorts rather than to the exchange.
When a perp trades above the spot market, long positioning is considered crowded and the funding rate is usually positive, meaning longs pay shorts. If the perp trades below spot, the rate can turn negative and shorts pay longs. The mechanism raises the carrying cost for the crowded side and encourages traders to rebalance, pushing the contract back toward the underlying market. For that reason, funding is watched not only as a trading cost, but also as a live signal of positioning pressure.
Leverage can amplify gains, then erase margin quickly
Leverage is the feature that draws traders in, and the one that destroys accounts fastest. By posting margin, a trader controls a position larger than the cash committed. At 10x leverage, $1,000 in margin controls a $10,000 position. A favorable 10% move can sharply boost returns, but the same move in the opposite direction can wipe out the collateral.
That is where liquidation comes in. Once losses consume enough posted margin, the exchange closes the position automatically. The guide gives stark examples: at 10x, a move of about 10% against the trade can trigger liquidation; at 25x, roughly 4% may be enough; at 100x, even a move near 1% can end the trade. High leverage does not improve accuracy. It only reduces the room to be wrong.
Why mark price matters more than the last trade
Another detail often missed by newer traders is that liquidation is usually not based on the last traded price shown on the screen. Exchanges typically track both an index price and a mark price.
The index price reflects an average drawn from major spot markets, while the mark price is a smoothed fair value derived largely from that index. Exchanges use the mark price to calculate unrealized profit and loss and to determine liquidation levels. The reason is practical. If liquidations were tied only to the last trade on a single venue, a brief spike or sharp wick during thin liquidity could force unfair liquidations. Mark pricing is meant to reduce that risk.
Why perps took over crypto trading
The product was introduced by BitMEX in 2016 and spread quickly through crypto markets. Traders wanted leverage, two-way exposure, and a structure that did not force them to roll contracts forward at expiry. Perps combined those features in one instrument, usually settling in cash or stablecoins rather than through delivery of the underlying asset.
The article also notes that regulated perpetual products in the United States face lower leverage limits, in line with other regulated futures. That sets them apart from offshore venues that historically offered extremely high leverage. The venue may change. The mechanics do not, and neither does the risk built into the product.