Perpetual Future
A derivative contract that tracks an asset's price with no expiry date, kept in line with spot by regular funding payments between traders.
A perpetual future is an agreement to exchange the change in an asset's price, margined with collateral and settled in cash, usually a stablecoin. It differs from a traditional dated future in two ways that matter: there is no expiry and therefore no roll, and the convergence normally enforced by delivery is replaced by the funding mechanism. Positions are valued against a mark price drawn from several outside spot markets, and are closed automatically when collateral falls below the maintenance requirement. Perpetuals account for the majority of digital-asset derivatives activity, which is why funding rates and open interest are watched as positioning indicators.
In practice
The perpetual swap was introduced by the exchange BitMEX in 2016 and the design was subsequently adopted across most derivatives venues.
The common misunderstanding
A perpetual future is not ownership of the underlying asset; it is a cash-settled contract that conveys none of the rights of holding the asset itself.