Perpetual Swaps Dominate Crypto Trading with Estimated $40 Trillion in Volume

Perpetual swaps, also known as perpetual futures or 'perps,' are the dominant trading instrument in the crypto market, processing an estimated $40 to $50 trillion a year in volume.

Their rise to prominence began with BitMEX's launch of the perpetual swap in May 2015, developed by co-founder Ben Delo.

This product eliminated the expiry date that plagued traditional futures contracts, allowing traders to hold positions for hours or years without worrying about settlement dates.

To maintain equilibrium, exchanges use a mechanism known as the funding rate, which calculates payments between long and short positions based on deviations from spot prices every eight hours.