Dear WEEXers,
A perpetual futures contract is a financial derivative between spot margin trading and futures trading. Compared to traditional delivery futures contracts, perpetual futures contracts are standardized, use margin trading, and offer T+0 settlement.
However, perpetual futures contracts do not have an expiration date or delivery requirement, allowing traders to hold them indefinitely. To keep the contract aligned with the spot price, perpetual futures contracts use a funding mechanism where funding rates are exchanged between long and short positions at regular intervals, helping prevent significant deviation from the spot price.
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