Settled futures have a fixed expiration date. At expiry, the contract settles against a reference price, and positions close automatically.

Perpetual futures have no expiry. Instead, they rely on a funding rate mechanism — periodic payments between longs and shorts — to keep the contract price anchored to the underlying spot market.

In crypto markets, PERPs typically dominate derivatives volume because they allow continuous leveraged exposure without the need to roll contracts. However, funding rate imbalances can introduce short-term volatility, particularly when positioning becomes crowded.

For mature tokens, PERPs often become a primary venue for price discovery — but only once spot liquidity is sufficiently robust.