Perpetual Contracts

What is a Perpetual Contract?

Perpetual contracts are similar to a future, however, they do not have an expiration date. In order to ensure the perpetual contract’s mark price is as close as possible to the index price, we implement funding payments. The percentage difference between the mark price and index price is applied to all outstanding perpetual contracts. For example, traders in long positions will make funding payments to traders that have short positions if the mark price is greater than the index value. This ensures mark price will always trade in line with the index.

Contract Specs:

Contract Size:

Each perpetual futures contract represents 1 vbyte of Bitcoin blockspace. This direct link to the size of blockspace makes the contract easy to understand and positions can scale directly based on expected transaction fee changes in terms of sats per vbyte.

Tick Size:

Minimum Price movement allowed in the contract is 0.01 sats/vb.

Margin Requirements:

To maintain a balanced market and mitigate the risk of excessive fee increases, short sellers are required to post an initial margin to open their positions. Given the potential for extreme fee rate spikes during periods of high network demand, posting additional margin is encouraged for short sellers. This additional margin provides two key benefits:

1. Reduces the risk of liquidation: By posting more margin, short sellers lower the likelihood of being liquidated in the event of unexpected fee rate increases.

2. Increases yield: Short sellers who post more margin can earn higher daily yield.