Glossary · P
Perp (Perpetual Swap)
A derivative contract that tracks an asset's price with no expiry date, allowing traders to go long or short with leverage. A funding rate mechanism keeps the perp price aligned with spot. Leading DEX perp platforms include dYdX, GMX, Drift Protocol, and Hyperliquid.
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How Perp works in practice
A perpetual swap is a futures contract with no expiry. It tracks the spot price through the funding mechanism rather than through settlement, which lets traders hold leveraged exposure indefinitely — as long as they can fund it.
Worked example
Opening a 10× long on ETH at 3,000 with 1,000 of margin gives 10,000 of exposure. A 10% fall in ETH wipes out the margin entirely. A 1% move changes the position value by 10% of the collateral.
Figures are illustrative and chosen to be checkable, not live market data.
The mistake that costs people money
Leverage cuts both ways and liquidation is automatic. Perps also charge funding continuously, so a position can be right on direction and still lose money if it is held through a period of adverse funding.
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Perp: common questions
- What is Perp?
- A derivative contract that tracks an asset's price with no expiry date, allowing traders to go long or short with leverage. A funding rate mechanism keeps the perp price aligned with spot. Leading DEX perp platforms include dYdX, GMX, Drift Protocol, and Hyperliquid.
- How does Perp work in practice?
- A perpetual swap is a futures contract with no expiry. It tracks the spot price through the funding mechanism rather than through settlement, which lets traders hold leveraged exposure indefinitely — as long as they can fund it.
- Can you give an example of Perp?
- Opening a 10× long on ETH at 3,000 with 1,000 of margin gives 10,000 of exposure. A 10% fall in ETH wipes out the margin entirely. A 1% move changes the position value by 10% of the collateral.
- What do people get wrong about Perp?
- Leverage cuts both ways and liquidation is automatic. Perps also charge funding continuously, so a position can be right on direction and still lose money if it is held through a period of adverse funding.
- Where can I learn more about Perp?
- Our full guide, What Are Perps?, covers Perp in depth with worked scenarios and the risks involved. This glossary entry is the short definition.