A perpetual future, or perp, is a contract that tracks the price of a stock or coin and never expires. Every market you trade through Based is one, so you're trading the price, not the asset itself.
Perps behave differently from the things they track. The differences come down to four ideas: no expiry, funding, margin and liquidation. Each gets a short explanation here, with a link to the full article where there's more to say.
A future with no expiry date
A classic futures contract is an agreement about a price with an end date. Traders have used them for centuries, but the end date is a hassle: positions have to be closed or rolled when the contract expires.
A perpetual future removes the end date. You open a position, long if you think the price goes up, short if you think it goes down, and hold it as long as you want. There's nothing to roll and no settlement day. If long and short are new words, long vs short explains both sides.
Without a settlement date, something else has to keep the perp's price close to the real thing. That something is funding.
How perps differ from traditional futures
Rollover. Traditional futures expire monthly or quarterly, so holding exposure for longer means closing one contract and opening the next, paying spreads and fees each time. A perp has nothing to roll.
Price tracking. A dated future can drift away from the spot price until it settles, and that gap, called the basis, can work for or against you. A perp replaces the basis with funding, a running payment that pulls its price back toward spot.
Access. Traditional futures usually need an account at a regulated futures broker, with an application and capital requirements. Perps on Hyperliquid need a self-custody wallet and USDC.
Funding rates, the anchor
Funding is a small payment between longs and shorts, settled every hour on Hyperliquid, where many centralised exchanges settle every eight hours. It passes directly between traders; the exchange takes no cut. When the perp trades above the price it tracks, longs pay shorts. When it trades below, shorts pay longs. That steady pull is what keeps a perp near the real price, even while the underlying exchange is closed.
Depending on your side, you either pay funding or receive it. For a trade held a day it's usually tiny. Held for weeks on the crowded side of a market, it adds up. Funding rates explained covers who pays, how big the payments get and how traders end up collecting them.
Margin and leverage
You don't pay the full value of a position up front. You post margin, USDC in your wallet, and the margin backs the position. Leverage is the ratio between position size and margin: with 5x leverage, $100 of margin controls a $500 position, and every price move hits you five times as hard, in both directions.
Scale it up and the numbers get sharp. At 10x, $1,000 of margin opens a $10,000 position: a 5% move in your favour makes $500, half your margin, and a 5% move against you loses the same. At 50x, a 2% move against you is enough to wipe out the margin entirely.
Leverage is optional and adjustable, and nobody reviews your choices before you trade. The leverage guide goes through how to pick a level.
Liquidation, the risk that matters most
If the price moves far enough against you, your margin runs out and the position closes automatically. That's liquidation, and the margin behind the position is gone. It's the biggest structural difference from owning a stock: a leveraged perp can be closed out by a move a stockholder would sit through, and there's no waiting for a recovery because the position no longer exists.
Your liquidation price is shown before you confirm a trade and on the position afterwards. Lower leverage and smaller size push it further from the current price. What is liquidation walks through a worked example and the maintenance margin rule that triggers it.
Four habits keep liquidation far away: use lower leverage, set a stop loss so you exit at a level you chose, add margin if the liquidation price drifts too close, and never put more on one trade than you can afford to lose.
How traders use perps
Speculation is the obvious use: long if you expect a rise, short if you expect a fall. Because shorting works exactly like buying, a falling market is as tradable as a rising one.
Hedging is the quieter one. Someone holding 1 BTC who worries about a short-term drop can short 1 BTC of perps; if the price falls, the gain on the short offsets the loss on the coins. Funds manage risk this way every day.
Some traders collect funding instead of betting on direction. When funding is high, they hold the asset and short the same amount of the perp, so price moves cancel out and the funding payments are the return. It's called a cash-and-carry or delta-neutral trade, and it still has risks: funding can flip, and a thinly margined short leg can be liquidated.
Those uses, plus leverage and markets that never expire, are why perp volume routinely exceeds spot volume across crypto.
What a perp is not
A perp is a derivative, not the underlying stock or coin. You get no dividends and no voting rights, and no coins land in your wallet. If your goal is owning an asset for a decade untouched, buy the asset through whatever venue sells the real thing. Perps are built for trading: reacting, hedging, going short, using capital efficiently.
What you get in exchange is the reason they exist. Markets that never close, shorting that works exactly like buying, and on Hyperliquid all of it from a self-custody wallet funded with USDC. Based is that wallet.
Before your first perp trade
Fund your wallet with USDC, since that's what margin is made of. Pick a market and a side. Set leverage low, or leave it at 1x. Then, before you confirm, look at two numbers on the trade screen: the liquidation price, which should sit well away from the current price, and the market's current funding rate, which tells you what holding the position will cost or pay.