What are perpetuals
Perpetual futures (perps) are derivative contracts that let you speculate on asset prices without owning the underlying asset. Unlike traditional futures, perpetuals have no expiration date, meaning you can hold a position indefinitely.
How perpetuals work
When you trade a perpetual:
You deposit collateral
You open a long (betting price goes up) or short (betting price goes down) position
Your profit or loss is determined by the price movement multiplied by your position size
You can close the position at any time
You never actually buy or sell the underlying asset. Instead, you're trading a contract that tracks its price.
Leverage
Perpetuals allow leverage, meaning you can control a larger position than your collateral would normally allow.
Example: With 10x leverage and $100 collateral, you can open a $1,000 position.
If the price moves 5% in your favor → you gain $50 (50% return on collateral)
If the price moves 5% against you → you lose $50 (50% of collateral)
Higher leverage amplifies both gains and losses. Dreamcash supports up to 40x leverage on eligible markets.
Funding rate
Since perpetuals don't expire, they use a mechanism called the funding rate to keep the contract price aligned with the spot price.
When funding is positive: longs pay shorts
When funding is negative: shorts pay longs
Funding payments occur periodically (typically hourly on Hyperliquid). If you're holding a position, you'll either pay or receive funding depending on your direction and the current rate.
Liquidation
If the market moves against your position and your losses approach your collateral, you risk liquidation. This is when the exchange automatically closes your position to prevent further losses.
Liquidation price depends on your leverage and entry price. Higher leverage = closer liquidation price = higher risk.
Key terms
Mark price
The price used for PnL calculations and liquidations
Entry price
The price at which you opened your position
Unrealized PnL
Profit/loss on your open position
Realized PnL
Profit/loss that has been settled (position closed)
Margin
Collateral allocated to a position
Maintenance margin
Minimum margin required to keep a position open
Further reading
For technical details on how perpetuals work on Hyperliquid:
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