A perpetual futures contract is an agreement to exchange the difference between entry price and exit price of an asset, with no delivery and no expiry. It was invented by BitMEX in 2016 and now carries the majority of crypto trading volume, which also makes it where nearly all crypto liquidations happen.
01How it works
You open a long or a short with leverage, posting margin in USDT, USDC or the base coin. The position is cash settled: there is no transfer of the underlying, only the price difference in the margin currency. Because the contract never expires, its price is kept near the spot index by the funding mechanism, periodic payments from one side to the other that grow with the premium.
Dated futures still exist and their liquidations also appear in feeds, especially around quarterly expiries. But the perpetual, always priced near spot, always open, is the instrument behind the cascade dynamics this site records.
02Why liquidations cluster here
Perpetuals offer the highest leverage in crypto, up to 125x on major venues, and are held by every kind of participant from one-dollar accounts to market makers. The combination of deep leverage and continuous trading means a sharp spot move immediately stresses every perpetual position at once, and the risk engines answer in bursts. That is the raw material of our event feed.