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Perpetuals and Assets

Perpetuals

Perpetual contracts, or "perps," is a derivative and a type of futures contract commonly used in crypto trading. Unlike traditional futures, they do not have an expiration date, allowing traders to hold positions indefinitely. This makes them ideal for continuous speculation on asset prices.

Benefits

  • Gain exposure to crypto prices without holding the actual tokens.
  • Go long or short depending on market expectations.
  • Hedge existing positions against volatility.
  • Potential for higher returns (with increased risk).
  • Earn from funding rate payments even when prices are stable.

Risks

  • Falling below maintenance margin can lead to forced closure of positions.
  • High market swings can magnify losses, especially with leverage.
  • Requires understanding of derivatives mechanics (margin, funding, leverage).

Assets and Collateral

To trade within dYdX, a collateral is required. Financially, a collateral is an asset that is pledged to secure a loan like borrowing cryptocurrency. In dYdX a collateral is used to:

  • Open and maintain trading positions;
  • Manage margin requirements;
  • Fee payments;
  • Other rewards.

Principal assets in dYdX are USDC and the dYdX token.