Perpetual contracts are covered in detail under perpetual futures, which explains their mechanics, margin rules and risks. Exchanges use several names for the same product, including perpetual swaps, perps and perpetual contracts.
A perpetual contract lets a trader take a leveraged long or short position on an asset's price without owning it and without a fixed settlement date. Unlike a standard futures contract, which expires and converges with the spot price on a set day, a perpetual can be held indefinitely. To stop its price drifting away from the underlying market, long and short holders exchange periodic payments called the funding rate: when the contract trades above the spot price, longs pay shorts, and when it trades below, shorts pay longs.
The product was popularised by the crypto exchange BitMEX in 2016 and became the most heavily traded instrument in crypto, offered by centralised exchanges and by on-chain decentralised derivatives platforms. High leverage means small price moves can wipe out a position, and waves of forced closures are a common feature of sharp crypto sell-offs. Many regulators restrict or bar retail access to such products, and they are often offered from offshore venues.