Perpetual Futures

A perpetual future ("perp") is a futures contract that never settles. With no expiry to force convergence, something else must keep its price glued to spot: the funding rate, a periodic payment exchanged directly between longs and shorts. Perp above spot means longs pay shorts, which pressures the perp back down. Below spot, shorts pay longs.

Why perps dominate crypto

Perps are the most liquid crypto instruments by far. One contract per asset instead of a strip of expiries, native shorting, high leverage, and no roll logistics. For most retail strategies, including everything backtested against spot-like price series, the perp is the instrument actually traded live.

What changes for a strategy on perps

Funding is a real cost, or a real yield. A position held through funding timestamps pays or receives, and strategies that are systematically long in bull markets bleed funding precisely when they're winning. Liquidation replaces expiry: the position lives until margin runs out, so risk management is entirely stop- and margin-driven. And the basis behaves differently, since the perp's premium mean-reverts around zero via funding instead of decaying like a dated future's basis. Carry on perps is harvested through funding rather than convergence.

On AlphaProve

Every backtest on AlphaProve runs on Bybit linear perps settled in USDT, so the perp is the instrument the simulated exchange actually fills rather than a proxy for spot. Both forces this page describes are modeled directly: the cost model debits or credits each funding payment as a position crosses a funding timestamp, and liquidation is priced against cross or isolated margin instead of an expiry ever closing the trade. Leverage is instrument-capped, and entry size comes from one of six sizing modes rather than a raw contract count.