What are perpetual futures?

A traditional futures contract has a settlement date, and that date is what forces its price to converge with the spot price of the asset. Remove the expiry and you remove the convergence mechanism — so a perpetual needs a replacement. That replacement is the funding rate.

At regular intervals, traders on one side of the market pay traders on the other. When the perp trades above spot, longs pay shorts; when it trades below, shorts pay longs. The payment scales with the size of the gap. This creates a continuous financial incentive to take whichever side is underweight, which drags the contract price back toward spot. Funding is a transfer between traders, not a fee paid to the venue.

Practically, funding is why a position can be correct about direction and still lose money slowly. Holding a long through a period of persistently positive funding means paying shorts every interval for the privilege.

Perps are traded on margin: a trader posts collateral and controls a position larger than that collateral. Ten times leverage means $100 of margin controls $1,000 of exposure. Gains and losses are computed on the full position, so a 1% move against a 10x position erases 10% of the margin.

When losses consume enough of the posted margin, the position is liquidated — force-closed by the protocol to prevent the account going negative. The liquidation price is the price at which this happens, and it is known in advance. At 10x, roughly a 10% adverse move is enough. At 25x, roughly 4%. Liquidation is not a penalty applied for being wrong over time; it is a threshold that a single sharp move can cross in seconds.

This is the central risk of the instrument. Leverage is not a way to make a position more profitable — it is a way to make the same position larger, including its losses, and to bring forward the point at which the position is closed for you.

On a centralised exchange, a trader deposits funds, the exchange holds them, and the trader has a balance in an account. Withdrawal is a request the exchange has to honour. On a non-custodial venue, funds stay in the trader’s own wallet, orders are signed by that wallet, and settlement happens on-chain. There is no deposit to request back.

CoinXchange DEX takes this approach: perpetual futures trading with self-custody and on-chain settlement, built on the Hyperliquid protocol. There is no account to open and no identity verification, because there is nothing held on the user’s behalf that would require it.

The trade-off is symmetrical to the benefit. No custodian means no support desk that can reverse a mistake, restore access to a lost wallet, or unwind a liquidation. Self-custody moves both the control and the responsibility to the trader.

Perpetual futures are a regulated instrument in many countries and CoinXchange does not offer them everywhere. The product is not available to users in the United States (CFTC), Canada, or comprehensively sanctioned jurisdictions including Cuba, Iran, North Korea, Syria, Russia and Belarus, along with the Crimea, Donetsk and Luhansk regions.

This restriction is enforced at the network edge, before the application loads, and it is not something a user can opt out of. Users elsewhere remain responsible for the laws that apply where they live. CoinXchange’s cross-chain swap and other tools are globally available and unaffected by this restriction.

Perpetual futures are a professional instrument. Most retail traders who use high leverage lose money, and the mechanism above explains why: funding costs accrue against you while you wait to be right, and liquidation removes you before a thesis has time to play out. Nothing here is financial advice, and no outcome is guaranteed.

If the goal is simply to hold a different asset rather than to take a leveraged directional bet, a cross-chain swap does that with none of this machinery and none of this risk.