The good and the bad of perps, according to crypto traders

Here is the latest from the digital-asset markets: Talk about crypto trading with any savvy trader, and the first thing that comes up these days is perpetual futures, or “perps” — derivatives contracts that allow traders to control a much larger position than the money held in the account. Perps work like standard futures, but with one key advantage: there is no expiry.

While bitcoin and ether traders can dabble in spot, futures, options, perpetual futures and even structured products, for traders of other altcoins, perps are perhaps the only avenue for derivatives available to them. Dated futures (those with expiry) for altcoins are illiquid, and the spot market is an afterthought for anybody who doesn't plan to hold.

So, CoinDesk talked to traders who have thrived in the perpetual futures market to explain what makes perps different from other derivatives, how they help efficiently manage the needs of institutional traders and retail traders alike and what perps trading actually costs. Their answers were clear and nearly unanimous: everyone loves perps because of their deep liquidity, cheap trading fees and brutal margin efficiency, which is the amount of trading exposure you can get per unit of collateral you post.

This shift continues to shape the digital-asset landscape, with analysts examining its near-term effects.