Coinbase International Exchange

How do perpetual futures stay in line with the index price of the underlying spot asset?

To ensure that the perpetual futures contract’s price stays close to the index price of the underlying spot asset, perpetual futures employ a funding rate mechanism, applied periodically. The funding rate governs payments between holders of long and short positions based on the difference in the price of the contract and the underlying index price. The funding mechanism is designed to minimize discrepancies between the perpetual futures market and the spot market.

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