Perpetual contracts are like traditional futures contracts. They differ in that there is no expiry date and no need for final settlement. A perpetual contract gives you exposure to the underlying asset. Your USDC collateral secures your asset purchases.

Perpetual trading is different from spot trading. Spot trading involves purchasing the actual asset from a spot market. Spot trading can be a better choice for long-term holders and those who want to engage in governance. Perpetual trading has distinct advantages over spot trading. With perpetual trading you can leverage your collateral to maximize profit. Perpetuals also make it easy to take long and short positions on a range of assets.

Funding rates incentivize a perpetual contract to stay in line with the price of the asset. Funding rates payments are exchanged between long and short traders. When a perpetual is trading above the price of an underlying asset, the funding rate is positive. In this case, long traders pay short traders a fee. If a perpetual is trading below the asset price, the funding rate is negative and short traders pay long traders a fee. Payments are only made between traders.