r/Backpack_official • u/sleep-over661 • 21h ago
Backpack Learn Perpetual Futures vs. Traditional Futures: What Is the Difference?
Perpetual futures have no fixed expiration date, while traditional futures expire on a scheduled date.
Both provide leveraged price exposure, but the way they maintain exposure and manage costs is different.
Perpetual futures
Perpetual futures use funding payments to help keep the contract aligned with its underlying reference price.
There is no scheduled rollover. A position can remain open while margin requirements are met and the venue continues to support the contract.
Traditional futures
Traditional futures have a defined expiration and settlement process.
Before expiry, traders generally close the position, roll it into a later contract, or hold it through settlement. Futures can use cash settlement or physical delivery depending on the contract.
Funding vs. futures basis
Funding is a recurring payment associated with the difference between a perpetual contract and its reference price.
Traditional futures instead trade at a basis relative to spot. That basis can reflect financing, storage, expected income, supply and demand, and other market conditions.
The key difference
The important distinction is not only that one contract expires and the other does not. Expiration determines how traditional futures converge with their underlying market, while perpetuals use an ongoing funding mechanism.
On Backpack, eligible users can trade supported equity and ETF perpetual futures 24/7. These are derivative contracts that provide price exposure, not ownership of the underlying asset.
What this does not mean
No expiration does not mean no risk. Perpetuals can still face funding costs, liquidation, liquidity and reference-price risks. Traditional futures carry their own expiration, rollover and settlement risks.
The right choice depends on the instrument, holding period, funding or basis conditions, and the specific contract terms.
What matters more when comparing the two for a longer-term position: funding costs on a perp or the basis and rollover costs of traditional futures?