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Derivatives OKX Trading

What is a perpetual swap contract?


Everything you need to know to start trading perpetual swaps on OKX

Perpetual swaps, like futures and options, are a type of cryptocurrency derivatives. While they are very similar to futures contracts, swaps differ from futures in two major ways, making them unique instruments and fairly popular in the crypto trading space.

In this article, we will go over the most common questions regarding perpetual swaps, addressing what they are and how they work, as well as some particulars of OKX perpetual swaps.

If you’re new to trading, you might find our in-depth cryptocurrency trading guide helpful. You can also sign up on OKX and get BTC worth $10 for free to start trading.

How do perpetual swaps work?

Perpetual swaps are essentially like futures contracts, where they allow traders to take long or short positions on an underlying asset. Like futures, swaps also give traders additional flexibility, such as the ability to use leverage and have contracts settled without ever having to actually own or custody the underlying asset.

However, the one major difference between futures and swaps is that of expiry. Where futures contracts have expiry dates set in advance, perpetual swaps can, in theory, go on indefinitely, as long as traders have enough margin to cover losses and prevent liquidations.

The second difference between futures and swaps is that of funding fees, which are essential for keeping perpetual swaps prices balanced. Since futures have an expiry date set in advance, their prices automatically converge with the underlying’s spot price as the expiry nears. Without such a mechanism, perpetual swaps could diverge significantly from the underlying’s spot price.

Funding rate and fees

This gap in swaps is filled with funding fees, which essentially act as counter-balances, incentivizing the less popular side of the market. These fees are based on the funding rate, which is calculated by comparing the price difference between a perpetual swap contract and the spot price of the asset that the contract tracks.

For example, if a perpetual swap contract is trading above the underlying’s spot price, the funding rate becomes positive, meaning the long position holders have to pay a funding fee to the short position holders for as long as they keep their positions open. Similarly, when the swap is priced lower than the underlying’s spot price, the funding rate becomes negative, and short position holders pay a fee to the long position holders.

In the absence of such a mechanism, there would be no incentive for traders to go against the trend and open positions countering a perpetual swap’s trajectory — nor would a swap be anchored to the underlying asset it is supposed to track.

OKX perpetual swaps

OKX, being a world-leading crypto exchange, offers some of the most liquid derivatives products in the market, including cryptocurrency futures, options and perpetual swaps.

Currently, OKX offers both coin-margined and USDT-margined perpetual swaps for a variety of cryptocurrencies, including BTC, ETH, LTC and more. Traders can also use up to 125x leverage, depending on OKX perpetual swaps position tiers. Generally, the higher the number of contracts traded, the lower is the leverage available to traders. 

Similarly, with the use of leverage, traders need to be mindful of the minimum initial margin ratio and the maintenance margin ratio, both of which are also listed on the position tiers page linked above. In summary, the former is the minimum amount required to open a position with the maximum available leverage, while the latter is the minimum amount required to avoid full and/or partial liquidations.

In order to provide a reliable trading experience, OKX perpetual swaps also use a mark price for reference, and this price, based on underlying indexes, is what is used to calculate users’ unrealized profits and losses. The purpose of this reference price is to avoid unnecessary liquidation scenarios in the event of highly volatile market conditions.

Finally, OKX perpetual swaps are typically settled on a daily basis, but with the introduction of the Unified Account feature, the platform has started rolling out real-time settlement for perpetual swaps, futures and options contracts.

Swaps trading on OKX also incurs trading fees, and users are encouraged to review our trading fees explainer to learn more.


  • Perpetual swaps are a type of futures, except that they have no expiration date or delivery, and can, in theory, remain open indefinitely.
  • In order to keep perpetual swaps close to the underlying’s price, a unique, funding-fee mechanism is used.
    • If a swap trades above the spot price, the funding fee is positive and is paid by long position holders to short position holders.
    • If a swap trades below the spot price, the funding fee is negative and is paid by short position holders to long position holders.
  • OKX offers a variety of perpetual swaps for trading, including BTC, ETH, LTC and more.
  • OKX users can also use up to 125x leverage when trading swaps, and can look at the corresponding minimum margin ratios and maintenance margin ratios on the position tiers page.
  • Funding fees for OKX swaps are applicable every eight hours and are exchanged between traders holding long and short positions.
  • With the introduction of the Unified Account feature on OKX, real-time settlement is being rolled out for all swaps, futures and options.
  • Trading fees applicable to swaps trading can be reviewed here.

Not an OKX trader? Sign up today to start trading perpetual swaps and other industry-leading derivatives.

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Disclaimer: This material should not be taken as the basis for making investment decisions, nor be construed as a recommendation to engage in investment transactions. Trading digital assets involve significant risk and can result in the loss of your invested capital. You should ensure that you fully understand the risk involved and take into consideration your level of experience, investment objectives and seek independent financial advice if necessary.