Discussing crypto trading with experienced traders often leads to conversations about perpetual futures, or 'perps,' which are derivative contracts allowing traders to control large positions with minimal capital. Unlike standard futures, perps have no expiration dates, making them a unique and essential tool for traders.
For altcoin traders, perps are often the only viable option for derivatives trading due to the illiquidity of dated futures and the spot market. Traders praise perps for their deep liquidity, low trading fees, and efficient margin usage, which enables them to manage risk effectively. However, they also express concerns about funding rates, which are recurring costs associated with keeping positions open. These rates can add up over time and are difficult to quantify and hedge.
The 'perpification' of various assets is gaining momentum, with traders expecting it to continue in the coming years. Despite the benefits, traders caution about the potential risks and unique challenges associated with perpetual futures, particularly the volatile funding-rate exposure that can't be quantified or hedged.