A perpetual future, or perp, is a contract that lets you take a position on an asset's price going up or down, without owning the asset and without an expiry date. It is usually traded with leverage, which means a small price move against you can wipe out the money you put in.
Perpetuals are leveraged and high risk. You can lose your entire margin. They are not available in every country, and nothing here is investment advice.
What a perpetual is
A classic futures contract has an expiry date, on which it settles at the market price. A perpetual has none. You can keep a position open for minutes or months, as long as you have enough margin.
You can go two ways.
- Long: you gain if the price rises and lose if it falls.
- Short: you gain if the price falls and lose if it rises.
No coins change hands. If you are long BTC through a perp, you hold a contract, not Bitcoin. Gains and losses are settled in the margin currency, typically a stablecoin.
The funding rate
Without an expiry, nothing forces the perp price to meet the real market price. The funding rate does that job. It is a periodic payment between traders, not a fee to the exchange.
- When the perp trades above the spot price, longs pay shorts. Holding a long gets more expensive, which pulls the price down.
- When the perp trades below spot, shorts pay longs.
Funding is charged on your position size, not on your margin, so with high leverage it adds up faster than it looks. If you hold a position for days, funding can decide whether the trade works.
Leverage, margin and liquidation
Margin is the collateral you post. Leverage is the ratio between your position size and that margin. With $100 of margin and 10x leverage, you control a $1,000 position.
Leverage multiplies results in both directions. On that 10x position, a 1% price move is worth about 10% of your margin. A move of roughly 10% against you would consume all of it.
It does not get that far. Exchanges set a maintenance margin, the minimum collateral a position must keep. When losses push your margin below it, the position is liquidated: the exchange closes it for you, and the margin behind it can be largely or entirely lost. The price at which this happens is the liquidation price. Higher leverage puts it closer to your entry.
Three habits limit the damage. None removes the risk.
- Use lower leverage than the maximum on offer.
- Know your liquidation price before you open the position.
- Set a stop loss so you exit on your own terms. In a fast market a stop can still fill at a worse price than you set.
Cross vs isolated margin
| Aspect | Cross margin | Isolated margin |
|---|---|---|
| Collateral | Your whole account balance backs all positions | A fixed amount is assigned to one position |
| Liquidation price | Further away, because more collateral absorbs losses | Closer, because only the assigned margin counts |
| Worst case | One bad position can drain the whole account | The loss is limited to the margin on that position |
| Suits | Positions that offset each other | Single trades where you want a hard cap on loss |
Neither mode is safer in general. Cross margin gives a position more room but puts more of your money behind it. Isolated margin caps the loss but liquidates sooner.
On-chain order books
An order book is a list of buy and sell orders at different prices. A trade happens when two orders match. A market order takes the best price available now. A limit order waits at the price you set.
Centralized exchanges run their order books on private servers and hold your funds in their custody. An on-chain order book runs matching and settlement on a blockchain. Orders, trades and liquidations can be verified publicly, and you deposit from and withdraw to your own wallet.
There are trade-offs. While you trade, your margin is held by the protocol, so you rely on its code and its operators. Smaller markets can have thin liquidity, which means wider spreads and more slippage on market orders. Crypto swap fees explained covers slippage and spread.
The risks in one place
- Leverage. Losses grow as fast as gains, and liquidation can take your entire margin.
- Volatility. Crypto prices move sharply, and a brief spike is enough to liquidate a highly leveraged position.
- Funding. Paying funding for a long time erodes a position even if the price goes nowhere.
- Liquidity. In thin markets you may exit at a much worse price than you see on screen.
- Protocol and counterparty risk. You depend on the exchange or protocol that holds the margin.
- Rules. Perpetuals are restricted or unavailable in many countries.
If you do not fully understand how liquidation works, do not open a leveraged position.
Perpetuals in THORWallet
In THORWallet, perpetual futures run on Hyperliquid, an exchange with an on-chain order book. Margin is in USDC. You deposit it from your own wallet and withdraw back to your own address. You can place market and limit orders, set take profit and stop loss, and choose cross or isolated margin. The details are on the perps page.
The same warning applies here as anywhere else. Perpetuals are leveraged and high risk, and you can lose the entire margin. They are not available in every country. This is not investment advice.
If you are new to holding your own keys, read what is a self-custody wallet first.
How to do it in THORWallet
Step-by-step articles from the help center, checked against the current app.
- Perpetuals in THORWalletHow perpetual futures work in THORWallet: they run on Hyperliquid, what you need to start, what trading costs and where to find it in the app.
- How to place a perpetual orderStep by step: open a long or short position on Hyperliquid in THORWallet with a market or limit order, add take profit and stop loss, and close it.
- Margin, funding and liquidationHow leverage, cross and isolated margin, funding payments and liquidation work for perpetuals on Hyperliquid in THORWallet.
- How to deposit to and withdraw from perpetualsStep by step: fund your Hyperliquid trading balance with USDC on Arbitrum from THORWallet, withdraw it again, and the minimums and fees.
Sources
- Hyperliquid docs: contract specifications
- Hyperliquid docs: funding
- Hyperliquid docs: margining
- Hyperliquid docs: liquidations
- CFTC: policy statement on the listing of perpetual contracts (PDF)
- FCA: ban on the sale of crypto derivatives to retail consumers
Reviewed on 12 Nov 2026. Statements about THORWallet were checked against the help center, and the sources above were opened on that day. This guide explains how things work. It is not financial advice.