Perps: Leverage, Funding and Mark Price

Perpetual contracts, leverage, funding rates, mark price, index price and open interest: understand how perps work and what can go wrong.

Trading · Intermédiaire · 10 min read · Publié le October 29, 2026

The essentials

This guide is general information and does not constitute investment, legal or tax advice.

What is a perpetual contract?

A traditional future is a commitment to buy or sell an asset at a fixed price on a future date. At expiry, the contract is settled and disappears.

A perpetual contract follows the same logic but with no expiry date: you can hold the position as long as your margin allows. You never hold the crypto itself, only an exposure to its price, settled in stablecoins or in another crypto depending on the contract.

Two positions are possible:

Long: you gain if the price rises, you lose if it falls.
Short: you gain if the price falls, you lose if it rises.

There is always a long facing a short. Perps are a zero-sum game between participants, before fees: what one wins, another loses.

Perps are found on centralized platforms and on perp DEXs, decentralized platforms where positions are managed by smart contracts or a dedicated blockchain. The mechanisms described here are common to both, with parameters that vary from platform to platform.

Leverage: amplifying gains and losses

Leverage lets you open a position larger than the sum you deposited. That sum is the margin (the collateral); the position's total size is its notional value.

With 1,000 USDC of margin and 10x leverage, you control a 10,000 USDC position. Consequences:

Price change	Effect on a 10,000 position	Effect as % of your margin
+1%	+100 USDC	+10%
-1%	-100 USDC	-10%
-10%	-1,000 USDC	-100%

Leverage doesn't change the market's direction, it changes the speed at which your margin melts. At 10x, a 10% drop is enough to lose all the margin. In reality, the position is liquidated before reaching that point, because the platform requires a minimum margin to be kept (the maintenance margin). This mechanism is detailed in our guide on margin and liquidation.

An important point: the displayed leverage isn't an obligation. You can open a perp at 1x or 2x; it's the ratio between the position's size and your margin that determines the real risk.

Funding: what anchors the perp to the real price

With no expiry, nothing mechanically forces a perp's price to converge to the spot price. The funding rate serves this purpose: periodic payments directly between traders, from longs to shorts or the reverse.

If the perp trades above the spot price (too many buyers), funding is generally positive: longs pay shorts. This encourages selling the perp and brings its price back toward spot.
If it trades below, funding is negative: shorts pay longs.

Funding is not a fee charged by the platform: it's a transfer between users. You pay or receive it only if you have an open position at the time of settlement.

How it's calculated

Formulas vary, but the structure is often the same:

an interest component, set by default at 0.01% per 8-hour period on both Binance and Hyperliquid;
a premium (premium index), which measures the gap between the perp's price and the index price;
a clamping function: on these two platforms, when the premium stays close to the interest component (gap below 0.05%), the final rate is brought back to the interest component, i.e. 0.01%.

The amount paid or received is calculated like this:

Funding amount = position notional value × funding rate

On Binance, the notional value is calculated at the mark price. On Hyperliquid, it is calculated at the oracle (spot) price.

Frequency varies by platform

Binance settles funding by default every 8 hours (00:00, 08:00 and 16:00 UTC), and may switch to more frequent settlement during high volatility.
Hyperliquid calculates an 8-hour rate but pays it every hour, at one eighth of that rate. Funding there is capped at 4% per hour, a cap far wider than on many centralized platforms.

So always compare rates on the same basis (per hour, per 8 hours or annualized) before concluding that a market is "expensive."

Mark price, index price, last price

On a perp page, three prices coexist. Confusing them is one of the most frequent sources of misunderstanding during a liquidation.

Last price: the price of the last trade executed on this perp, on this platform. It's usually the one on the chart. It can spike sharply if a large order sweeps through a thin order book.
Index price: a weighted average of the asset's price across several major spot platforms. It represents the "true" market price and limits the impact of manipulation on a single platform.
Mark price: a reference price calculated from the index price, the funding and the contract's price. On Binance, it is the median of three values derived from these elements. It is less volatile in the short term than the last price.

Why it's crucial: it's the mark price that is used to calculate your unrealized profit or loss and to trigger liquidation. An isolated spike on the last price doesn't necessarily liquidate you, but if the mark price reaches your liquidation price, the position is closed, even if the chart seems "never to have gone there."

Another consequence: your stop orders can often be triggered on either the last price or the mark price, at your choice. Check this setting on your platform.

Open interest

Open interest is the total number of contracts still open at a given moment. It differs from volume: volume counts all contracts traded over a period, open interest only those that remain open.

When a new buyer and a new seller open a position together, open interest rises.
When two traders each close their position, it falls.
When a position simply changes hands, it doesn't move.

Sharply rising open interest means more capital, often leveraged, is committed to the market. It is neither bullish nor bearish in itself: it is above all an indicator of the amount of leverage in play, hence of the risk of sudden moves if many positions are liquidated at the same time.

A concrete example

You open a long of 0.5 BTC on a BTC/USDT perp, with a mark price of 60,000 USDT and 10x leverage.

Notional value: 0.5 × 60,000 = 30,000 USDT.
Margin committed: 30,000 / 10 = 3,000 USDT.
Funding is +0.01% per 8-hour period (positive: longs pay).
Payment per period: 30,000 × 0.0001 = 3 USDT, paid to shorts.
Per day (3 periods): 9 USDT. Over 30 days at a constant rate: 270 USDT.
Relative to your 3,000 USDT margin, that's 9% of the margin in one month, in funding alone, before trading fees and even if the price hasn't moved.

If funding rises to +0.05% per 8 hours during a phase of euphoria, the payment goes up to 15 USDT per period, or 45 USDT per day. Conversely, with negative funding, that same long would receive these amounts.

On a platform that settles hourly, like Hyperliquid, a rate of 0.01% per 8 hours becomes 0.00125% per hour: on the same 30,000 USDT position, that's 0.375 USDT per hour, the same total of 3 USDT over 8 hours.

Perps and regulation in Europe

Crypto derivatives generally do not fall under the MiCA regulation, which governs crypto-assets themselves, but under financial instrument regulation (the MiFID II directive).

On February 24, 2026, ESMA, the European Securities and Markets Authority, published a statement noting the rise of derivative offerings marketed as "perpetual futures." It considers that these products are likely to fall within the scope of national product intervention measures on CFDs, and specifies that the commercial name given to the product is irrelevant. When that is the case, firms offering them to retail clients must comply with:

leverage limits;
a mandatory risk warning;
automatic closing of positions when margin falls below a threshold, and negative balance protection;
a ban on inducements (bonuses, gifts) to encourage trading.

In France, for crypto-asset CFDs offered to retail clients, leverage cannot exceed 2, according to the French authorities' ABE Infoservice website. A platform offering you 50x or 100x as a European retail client should therefore make you question its status and the protections you actually have. The status of perp DEXs with respect to these rules raises legal questions beyond the scope of this guide.

The risks to know

Liquidation: with leverage, a move of a few percent can be enough to lose all the committed margin.
Accumulated funding: a position held for a long time on the "paying" side can lose money even if the price doesn't move.
Volatility and wicks: sudden moves trigger chain liquidations that amplify the move.
Platform risk: bankruptcy or withdrawal freezes on a centralized platform; smart contract bugs, oracle manipulation or outages on a perp DEX.
Last-resort mechanisms: in case of extreme losses, some platforms may automatically close winning positions (auto-deleveraging).
Unfavorable statistics: an AMF study of 15,000 investors showed that 9 in 10 clients had lost money on Forex and/or CFDs.

Mistakes to avoid

Choosing maximum leverage by default: leverage is chosen based on the loss you accept, not on what the platform allows.
Ignoring funding: on a position held for several weeks, it can exceed trading fees.
Comparing rates on different bases: an hourly rate and an 8-hour rate can't be compared directly.
Watching the wrong price: liquidation depends on the mark price, not the last price displayed on the chart.
Reading open interest as a buy signal: it measures the quantity of open positions, not their direction.
Neglecting the regulatory framework: check who is offering you the product and what protections apply to you.

Some crypto prop firms have you trade perps on an evaluation account: their loss limits come on top of liquidation (see how a crypto prop firm challenge works).

Frequently asked questions

What is a crypto perpetual contract?

A futures contract with no expiry date: it exposes you to a crypto's rise or fall, long or short, with leverage, without holding the asset.

How does funding work?

It is a periodic payment between longs and shorts, equal to the position's notional value multiplied by the funding rate. It keeps the perp's price close to the spot price, and its frequency varies by platform.

When is a leveraged position liquidated?

Leverage multiplies losses relative to your margin: at 10x, a 10% move against you wipes out the margin, and liquidation happens before that. It is calculated on the mark price, not the last price.

Are perps allowed in Europe?

ESMA considers that perps offered to retail investors probably fall under CFD rules: limited leverage and mandatory protections.

Key takeaways

A perp is a future with no expiry: you are exposed to the price without holding the asset, long or short.
Leverage multiplies gains and losses relative to your margin; at 10x, a 10% move against you wipes out the margin, and liquidation happens before that.
Funding is a periodic payment between longs and shorts, equal to the notional value multiplied by the rate; its frequency varies by platform.
The mark price, derived from the index price, is used to calculate your unrealized losses and your liquidations; the last price can deviate from it during a spike.
In Europe, ESMA considers that perps offered to retail clients probably fall under the CFD rules, with limited leverage and mandatory protections.