Short answer: Perpetual futures are derivative contracts with no expiry date that stay close to the spot price through a funding rate, a periodic payment between the two sides. When the rate is positive longs pay shorts, and when it is negative shorts pay longs. The payment is the position value times the rate. These contracts are usually traded with leverage, which can lose the whole margin, and retail access depends on where you live.
Calculate it with your own figures: Funding rate calculator, Crypto liquidation price calculator and Crypto futures calculator.
A perpetual contract has no settlement date to pull its price back to spot, so funding payments do that job instead. This guide explains the prices involved, who pays whom, how the rate is built and how leverage turns small moves into liquidation. Rules come from exchange and regulator documents opened on 4 November 2026, and they differ by venue and change over time. All worked examples are hypothetical.
This is general education. It does not recommend any platform, contract, setting or strategy, and it makes no forecast. Derivatives with leverage can lose the whole margin quickly. This page is not aimed at residents of Turkey; the reason is in the last section.
What is a perpetual future?
A perpetual future is a derivative with no fixed expiration date, designed to track the spot price of the asset it references through funding payments, as the CFTC describes it in its 2026 customer guide.
| Feature | Dated futures | Perpetual futures |
|---|---|---|
| Expiry | Fixed date | None |
| What ties price to spot | Convergence as expiry approaches | Funding payments; convergence is not guaranteed |
| Keeping exposure longer | Roll into the next contract | Stay open and pay or receive funding |
| Leverage | Set by margin rules | Common, though the CFTC notes it is not inherent to the product |
He, Manela, Ross and von Wachter's paper Fundamentals of Perpetual Futures makes the key point: unlike fixed-maturity futures, perpetuals are not guaranteed to converge to spot. The contract price can stay away from the index for a while, and funding is the cost or income of holding through that gap.
Index price, mark price and last price
A perpetual contract uses three prices, and each does a different job.
| Price | What it is | Used for |
|---|---|---|
| Index price | Weighted average of the asset's spot prices across major exchanges | Spot reference for the premium and the mark price |
| Mark price | Fair-value estimate: the median of two index-based prices and the contract price | Unrealized profit and loss, liquidation trigger, funding amount |
| Last price | Latest trade on the contract's own order book | The headline quote; realized profit and loss comes from the prices you actually trade at |
Binance says the mark price helps prevent unnecessary liquidations and discourages manipulation, because a thin order book can print a price far from fair value for a moment. So a position can be liquidated while the last price looks safe, or survive a brief wick, depending on the mark. Other venues differ: Hyperliquid's funding document uses an oracle price built from a weighted median of exchange spot prices.
Funding rate explained: who pays whom
Funding is a payment between longs and shorts, not a fee to the venue, and its sign tells you which side pays.
| Funding rate | Contract vs index | Pays | Receives |
|---|---|---|---|
| Positive | Usually above; the interest component can keep the rate positive at a small discount | Longs | Shorts |
| Negative | Below, on the premium measure | Shorts | Longs |
A negative funding rate means shorts pay longs for that interval. It describes the gap between contract and index, and it is not a forecast of where the price goes next. The rate is recalculated every interval and can change sign.
Binance, Hyperliquid and OKX each state that they take no fee on funding itself (documents read 4 November 2026). Trading fees are separate. Binance and OKX also state that only positions open at the funding time pay or receive, so a position closed earlier owes nothing for that interval. Binance adds that the transfer can happen up to 15 seconds from the scheduled time.
How is the funding rate calculated?
On the common design, the rate is an average premium plus a small interest component, with a clamp that often pins the result at the interest rate.
Funding rate = P + clamp(I - P, -0.05%, +0.05%) (8-hour interval)
P = [max(0, impact bid - index) - max(0, index - impact ask)] / index
I = interest component, 0.01% per 8 hours by defaultBinance documents this form for USDⓈ-M contracts, with the premium sampled every 5 seconds and scaled by interval length. OKX and Hyperliquid publish the same clamp of 0.05% around an interest component of 0.01% per 8 hours. Impact bid and ask are the average prices of trading a set notional against the book. The results below use hypothetical premiums.
| Average premium (P) | I - P | After clamp | Funding rate |
|---|---|---|---|
| 0.03% | -0.02% | -0.02% | 0.01% |
| 0.06% | -0.05% | -0.05% | 0.01% |
| -0.04% | 0.05% | 0.05% | 0.01% |
| 0.10% | -0.09% | -0.05% | 0.05% |
| -0.12% | 0.13% | 0.05% | -0.07% |
Any premium from -0.04% to +0.06% gives exactly 0.01%, which is why that figure appears so often on quiet contracts. Outside the band, the rate moves with the premium until it reaches a venue's cap or floor.
Perpetual futures example: a funding payment
The payment is position size times mark price times the rate, so it is charged on the full position value and not on your margin.
Hypothetical example. A long of 0.2 BTC at a mark price of 70,000 USDT has a position value of 14,000 USDT, held with 1,400 USDT of margin (10x), on an 8-hour schedule. Each row assumes the rate and mark stay constant for 30 days (90 payments), which real markets do not do.
| Rate per 8 hours | Each payment (USDT) | Over 30 days (USDT) | As share of margin |
|---|---|---|---|
| +0.01% | pays 1.40 | 126.00 | 9.0% |
| +0.05% | pays 7.00 | 630.00 | 45.0% |
| -0.02% | receives 2.80 | 252.00 | 18.0% |
Funding matters more as leverage rises, because the payment stays the same while the margin shrinks: at 5x, with 2,800 USDT of margin, the +0.05% row would be 22.5% rather than 45%. In simple terms, 0.01% every 8 hours adds up to 10.95% of position value over a year (0.01% x 3 x 365). That is arithmetic, not an expectation. A strategy test that ignores funding misstates its costs, as backtesting pitfalls explains, and funding is one of the moving parts in the crypto arbitrage guide.
Leverage and liquidation: how the whole margin can be lost
Leverage puts a larger position on the same margin, so a small adverse move can trigger liquidation and lose the whole margin.
Binance's liquidation page (updated 4 January 2026) says liquidation is triggered when collateral falls below maintenance margin, and that it happens when the mark price reaches the position's liquidation price. The simplified isolated-margin form below ignores fees and funding; real maintenance rates come in tiers that vary by venue and position size.
Liquidation price (long) = (entry x size - margin) / (size x (1 - maintenance rate))| Leverage | Margin (USDT) | Approx. liquidation price | Price move |
|---|---|---|---|
| 3x | 4,666.67 | 46,901.17 | -33.0% |
| 5x | 2,800.00 | 56,281.41 | -19.6% |
| 10x | 1,400.00 | 63,316.58 | -9.5% |
| 20x | 700.00 | 66,834.17 | -4.5% |
| 50x | 280.00 | 68,944.72 | -1.5% |
Reaching that price does not mean losing only that percentage: at 10x, a 9.5% fall has already consumed about 95.5% of the margin. Further points to understand, from the same Binance page:
- Execution can be worse than the level. In volatile markets the mark price can jump past the calculated price.
- Fees apply. Part of any remaining collateral may go to a liquidation clearance fee.
- Other accounts can be affected. If the insurance fund cannot absorb losses, auto-deleveraging can close opposing positions.
- Alerts are not a safeguard. Delivery of margin call and liquidation notices is not guaranteed.
Funding paid also reduces your balance, which can bring liquidation closer over time. In cross-margin mode, losses can draw on more than one position's margin. The CFTC's guide tells traders to understand how leverage and margin affect liquidation, never to risk more than they can afford to lose, and to monitor open positions. Automated systems need the same limits in code, as set out in trading bot risk management.
Funding rate rules differ by venue
Intervals and valuation prices differ, so compare funding rates only after converting them to the same period.
| Item | Binance USDⓈ-M | Hyperliquid | OKX |
|---|---|---|---|
| Interval | 8 hours by default on its funding page, and can change in extreme volatility; its live fundingInfo endpoint showed 434 of 565 trading perpetuals at 4 hours, 130 at 8 and 1 at 1, so check the symbol | Every hour, at one eighth of the computed 8-hour rate | 8 hours by default; 1, 2 or 4 also supported, and frequency can rise automatically after the rate hits its cap or floor |
| Interest component | 0.03% a day (0.01% per 8 hours) by default | 0.01% per 8 hours | 0.01% |
| Payment based on | Mark price | Oracle price | Mark price |
| Cap or floor | 0.75 x maintenance margin ratio on listed symbols, otherwise 2% | 0.5% per hour | Published separately; can change in real time with market conditions |
A hypothetical 0.01% paid every 4 hours is two payments in 8 hours, so it equals 0.02% per 8 hours. Reading the same data through an API is a separate job; the Hyperliquid API guide shows one wallet-based example.
Who can trade perpetual futures? US, UK, EU and Turkey
Access depends on your jurisdiction, and regulators treat these contracts very differently.
| Jurisdiction | Position |
|---|---|
| United States | The CFTC says crypto perpetuals largely grew up on offshore venues outside its jurisdiction but can be offered on CFTC-regulated exchanges, and it approved a bitcoin perpetual for listing as a futures contract on 29 May 2026. Its customer guide says to trade only on CFTC-registered exchanges and avoid offshore venues. |
| United Kingdom | Since 6 January 2021 the FCA has banned selling, marketing and distributing to retail consumers any derivatives that reference unregulated transferable cryptoassets, for firms acting in or from the UK. Its page last updated on 6 February 2026 says that ban stays in place while retail access to crypto exchange traded notes opens. |
| European Union | ESMA's statement of 24 February 2026 says perpetual futures are likely to fall under national CFD measures where they meet the CFD definition, which bring leverage limits, a risk warning, margin close-out and negative balance protection. The commercial name is irrelevant, and a Key Information Document is needed for retail clients. |
| Turkey | Article 14 of Communiqué III-35/B.2 of the Capital Markets Board (SPK, also CMB) bars leverage, derivatives, margin purchases and short sales on assets listed on platforms, so leverage is not available on SPK-listed platforms. Article 99/A of Capital Markets Law No. 6362 treats activity aimed at Turkish residents by foreign platforms as unlicensed. SPK also says being on its list does not mean a platform is authorized. |
This page is not aimed at residents of Turkey; the wider rules are in is crypto legal in Turkey. Elsewhere, check your regulator and the platform's terms before trading, and treat this table as a dated summary, not legal advice. Nothing here explains how to get around geographic or identity checks, and doing so can breach a platform's terms and local law.
Frequently asked questions
What is the difference between perpetual futures and regular futures?
Regular futures have an expiry date and converge toward spot as it approaches. Perpetual futures never expire and rely on funding payments between longs and shorts to stay close to spot, with no guarantee of convergence.
What does a negative funding rate mean?
Shorts pay longs for that interval, because the contract is below the index on the premium measure. It is not a price forecast, and the sign can change at the next calculation.
Do I pay funding if I close before the funding time?
On Binance and OKX, as documented on 4 November 2026, only positions open at the funding time pay or receive it. Rules differ by venue, and closing and reopening has its own trading costs.
Does leverage change the funding rate?
No, the rate is the same whatever leverage you choose. The payment is based on position value, so higher leverage makes the same payment larger relative to your margin.
Can I lose more than my margin on perpetual futures?
You can lose all the margin on a position, and in cross-margin mode losses can draw on a wider balance. Whether a balance can go negative depends on the venue's rules and any local protection, such as the negative balance protection under EU CFD measures.
Are perpetual futures legal for retail traders?
It depends on the country. As of November 2026, the UK bans retail sale of crypto derivatives, the EU applies CFD and investor-protection rules where relevant, the US allows listing on CFTC-regulated exchanges, and leverage is barred on SPK-listed platforms in Turkey.
Sources
- CFTC: Crypto Asset Perpetual Contracts, customer education guide (2026) (opens in a new tab)
- CFTC press release 9240-26: approval of a bitcoin perpetual contract, 29 May 2026 (opens in a new tab)
- ESMA public statement on derivatives in scope of the CFD product intervention measures, 24 February 2026 (opens in a new tab)
- FCA: FCA bans the sale of crypto-derivatives to retail consumers, 6 October 2020 (opens in a new tab)
- FCA: FCA opens retail access to crypto ETNs, updated 6 February 2026 (opens in a new tab)
- Binance: Introduction to Binance Futures Funding Rates (opens in a new tab)
- Binance: Mark Price and Price Index in USDⓈ-Margined Futures (opens in a new tab)
- Binance: Futures Liquidation Protocols (opens in a new tab)
- Binance: Leverage and Margin of USDⓈ-M Futures (opens in a new tab)
- OKX: Perpetual funding fee mechanism (opens in a new tab)
- Hyperliquid Docs: Funding (opens in a new tab)
- He, Manela, Ross, von Wachter: Fundamentals of Perpetual Futures (arXiv 2212.06888) (opens in a new tab)
- Resmî Gazete: SPK Communiqué III-35/B.2, Article 14, 13 March 2025 (Turkish) (opens in a new tab)
- Capital Markets Law No. 6362, consolidated text, Article 99/A (Turkish) (opens in a new tab)
- SPK: Announcement on crypto asset service providers, 5 August 2024 (Turkish) (opens in a new tab)
This guide is general information about software and markets, not investment, legal or tax advice. Automated trading can lose money, past or backtested performance does not guarantee future results, and the rules that apply depend on your jurisdiction and your exchange's terms. Sources, checks and corrections: see the editorial policy.