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What is the difference between a delivery contract and a perpetual contract
Perpetual contracts differ from delivery contracts in that they settle in cash instead of delivering the underlying cryptocurrency on a fixed date.
Oct 25, 2024 at 04:08 pm
What is the Difference Between a Delivery Contract and a Perpetual Contract?
In the world of cryptocurrency trading, there are two common types of contracts: delivery contracts and perpetual contracts. While both types of contracts allow traders to speculate on the price of a cryptocurrency, there are some key differences between them.
1. Underlying Asset
- Delivery contracts: Represent the physical delivery of the underlying cryptocurrency on a specified date.
- Perpetual contracts: Do not represent the physical delivery of the underlying cryptocurrency and instead settle in cash.
2. Settlement Date
- Delivery contracts: Have a fixed settlement date on which the underlying cryptocurrency is delivered.
- Perpetual contracts: Do not have a settlement date and can be held indefinitely.
3. Funding Rate
- Delivery contracts: Do not have a funding rate.
- Perpetual contracts: Have a funding rate that is paid periodically to keep the contract price in line with the spot market.
4. Risk
- Delivery contracts: Carry the risk of the underlying cryptocurrency not being delivered on the settlement date.
- Perpetual contracts: Carry the risk of the funding rate fluctuating, which can lead to losses or profits.
5. Suitability
- Delivery contracts: Are suitable for traders who want to take delivery of the underlying cryptocurrency or hedge against the risk of a physical delivery.
- Perpetual contracts: Are suitable for traders who want to speculate on the price of a cryptocurrency without the risk of physical delivery or settlement.
6. Examples
- Delivery contracts: CME Bitcoin Futures, Bakkt Bitcoin Monthly Futures
- Perpetual contracts: Binance Futures, OKX Perpetual Swap, FTX (now bankrupt)
Disclaimer:info@kdj.com
The information provided is not trading advice. kdj.com does not assume any responsibility for any investments made based on the information provided in this article. Cryptocurrencies are highly volatile and it is highly recommended that you invest with caution after thorough research！
If you believe that the content used on this website infringes your copyright, please contact us immediately (info@kdj.com) and we will delete it promptly.
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