← Futures · lesson 7 of 12
By the end of this one you'll know what makes a perpetual different from a regular futures contract, what funding is, and how a tiny repeating fee quietly adds up on positions held a long time.
A regular futures contract has an expiration, a due date when the promise settles, but a perpetual futures contract never expires, it can be held forever. That creates a problem: with no due date forcing a settle-up, the contract's price could drift away from the real price of the actual coin. The fix is called funding, and I think of it like a lead rope on a horse with no fence. The perpetual wanders, and every 8 hours the rope gives a little tug back toward the barn, the barn being the real price. The tug is a small payment between traders. Longs are the folks set up to gain if the price rises, and shorts are the folks set up to gain if it falls. When the crowd leans long and the contract drifts above the real price, longs pay shorts a little, and when the crowd leans short and it drifts below, shorts pay longs. No company collects it, it just passes between the two sides, and it's the quiet reason the perpetual's price stays hugging the real one.
Same lesson, told by a hundred dollar bill. Tap to walk it one step at a time.
In this example, someone holds a $100 perpetual position while funding is 0. 01% every 8 hours, on the paying side.
That's a penny per payment, three cents a day, basically nothing.
But say the crowd piles in and funding jumps to 0.
1% per payment: now it's 30 cents a day, roughly $9 over a month on that same $100 position.
In this example the position has to gain 9% in a month just to break even on the rope tugs alone.
On lunch break, a coworker slides his phone across the table. He's been holding a $100 crypto position for three months, the price has gone basically nowhere, but his balance keeps drifting down anyway. He asks if you've ever heard of something called funding.
Pick your move. Then peek at the other roads if you're curious.
A perpetual never expires, so a small repeating payment called funding keeps its price tied to the real one, and small repeating is exactly how money slips out unnoticed.