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The blockchain ecosystem has brought new types of contracts into our lives, including perpetual swap contracts. As a result of the innovations of recent years, our perception of money has changed.
Especially digital uses and breakthroughs in the field of technology have directly affected the financial field. In the old period, the main perception of money was only the traditional currencies.
Technology and software developments started to change the situation. As a result of the integration of all these situations, the birth of cryptocurrencies has occurred.
Due to the developments in cryptocurrencies, some different transactions have emerged. Therefore, new investment types, different blockchain terms, and specific contract types have emerged.
Perpetual contracts are one of the specific contract types that emerged in our lives with cryptocurrencies. This type of contract is used in various situations and is of great importance in cryptocurrencies and many financial transactions.
Perpetual swaps are types of crypto derivatives that allow investors to take either short or long positions on an underlying asset without owning it. Additionally, they don't have an expiration date.
Join us in this blog as we analyze perpetual futures and perpetual futures contracts for you comprehensively. Let's start by examining the perpetual futures!
Traders can obtain exposure to an illiquid asset or index indefinitely through perpetual futures contracts. Cash is used to settle these contracts. Investors can leverage their trades and investments with perpetual futures.
They enable leveraged cryptocurrency hedges and speculation. Perpetual futures are contracts between people who want to buy and people who want to sell.
The person who wants to buy pays the person who wants to sell an initial cash flow, and the seller pays the buyer based on when the futures price enters and leaves the market.
Continuous perpetual futures cover transactions made in advance without time limitations. In this way, it is possible to earn high profits with the contracts made. It should be noted that the risk of loss is high due to the leverage system, margin, and collateral effect.
If you are risk-averse, you can make a risk-free investment by choosing EURK, which has an indexed structure with the euro among stablecoins.
As a euro stablecoin, EURK provides stable value with a 1:1 ratio to the euro. Therefore, it is a reliable stablecoin option for people who want to invest in stablecoins. You can check our articles “EURK euro stablecoin”, “buy/sell EURK,” and “transfer EURK” for more information!
A futures contract is a concept that offers investors the opportunity to buy and sell an asset against investors at a spot or independent fee at a predetermined maturity period.
In cases where there is no maturity period or date, it is known as a perpetual futures contract. It is a situation that creates the opportunity to open a short or long position according to the rise and fall forecasts.
For example, it is possible to close a transaction made today according to the predicted values months later. Since there is a continuation of this system, risk management needs to be done carefully.
Therefore, it makes sense to create a perpetual contract close to the spot price. In addition, attention should be paid to the collateral situation, funding amount, and indexation prices.
Indexation prices are determined in parallel with the contract price. Therefore, you can choose stablecoins indexed to the euro, such as EURK.
A perpetual futures contract works with a certain collateral system. Therefore, it offers high profit opportunities with the leverage system. However, liquidation may occur in possible negative situations. You can check out this article, “Liquidity in Stablecoins,” to learn more.
A perpetual futures contract, often called a perpetual swap, is a cryptocurrency derivative that lets traders speculate on asset prices. These contracts can be either short or long positions, and they don't have an end date, so traders can hold on to them perpetually.
Perpetual futures markets use a funding approach to keep the perpetual price tied to the spot price. This methodology compares the perpetual price to spot market reference prices numerous times a day.
A positive funding rate occurs when the perpetual price is above the spot price and long positions pay short positions. On the other hand, if the perpetual price is lower than the spot price, there is a negative funding rate. Therefore, traders with short positions have to pay traders with long positions.
This method keeps the perpetual price equal to the spot price, which could encourage longs to sell their positions and shorts to buy them. Therefore, you need to pay attention. You can check “crypto funding rates” to learn more about this method!
A perpetual futures contract has its pros and cons. Due to the collateral and leverage system, it will offer investors the opportunity to earn big profits in the future. We can also say that there is a high-income opportunity with low capital.
However, in negative situations, liquidation occurs as a result of the margin level reaching certain rates. As a result of this situation, the transaction is automatically closed, and you appear to be bankrupt.
Therefore, it is risky, as your loss will be high and fast. If you want to prevent liquidation, you will need to deposit more money by providing additional collateral at a certain loss level. Margin rates and margin levels vary according to your trade type.
If you trade with cryptocurrencies, you need to work with brokerage firms that provide quality service on blockchain. As it is known, blockchain technology is a system consisting of blocks that act as a digital ledger and accountant to control cryptocurrencies.
In summary, perpetual future contracts give investors all kinds of liquidity, leverage, and accessibility but also substantial risk and volatility.
Centralized cryptocurrency exchanges may be hacked or collapse due to price swings. It is beneficial for new traders to avoid these contracts since they increase DeFi hacking risks.
If you want a risk-free and secure option, EURK is here for you as a euro stablecoin. You can benefit from fast, easy, and secure crypto exchanges and crypto payments with EURK.
Perpetual futures in crypto and how long the contract lasts are two of the main details that are highly questioned. As the name suggests, the contract has an unlimited duration. Therefore, there is no expiration time or end point.
However, it would be wrong to think that there is a possibility that the transaction will remain open forever. As there is a collateral and leverage system, the transaction will be closed automatically in case of a loss.
In the case known as liquidation, if the loss level reaches a certain margin level, the transaction closes automatically. It occurs as a result of the risk ratio reaching its maximum level. In addition, transaction sustainability can continue with additional collateral according to the situation.
For this reason, you can trade by choosing one of the stablecoin types that experience less fluctuation among cryptocurrency types. EURK preference, which is euro-based, would be logical and more reliable.
The comparison of transactions related to perpetual futures with traditional futures is actually quite simple. As understood from the concept of perpetual, it is a futures transaction that has no expiration date.
Traditional futures have major differences due to their specific duration. In continuous transactions, various details such as collateral, margin, and leverage are of great importance.
Futures contracts obligate sellers and buyers to sell an asset at a fixed price in the future, regardless of its market value. Perpetual future contracts have no expiration date, unlike future contracts.
For those who do not like risk and want to be more cautious about profit, stablecoins that are indexed to real currencies are better options. EURK is one of the most reliable stablecoins in this regard.
There are some risks with perpetual future contracts. Investments are made because of forecasting and speculation. However, sometimes things may not go the way you want. It is possible to make very high profits with the money offered as collateral.
In other cases, however, liquidation occurs when the margin level reaches a certain risk level. Therefore, the transaction will close automatically, but the investor will have to deposit additional collateral because he or she does not want to close the transaction.
In some cases, this situation can reach unmanageable levels. To give an example, it is similar to a person who loses money by playing poker. Entering the psychology of a gambler, you may think that you will definitely win but end up losing more.
As a result of the continuous continuation of additional collateral, large losses may occur. In addition, working with poor-quality crypto exchanges and digital banks carries certain risks.
For this reason, high-level institutions in blockchain technology should be preferred. You can trust CBQ, a reliable crypto-friendly digital bank, for your wide range of crypto needs.
In addition, it is logical for people who want to be protected from risks to turn to crypto types that are equal and indexed with real coins. These types of cryptocurrency are known as stablecoins.
EURK is a secure stablecoin that has reserves both in Switzerland and the Dominican Republic. Additionally, EURK stablecoin is provided by Cryptobunq, which is a highly secure crypto service provider.
You can contact us and become our partner to learn more about the advantages of EURK. Start to enjoy the risk-free nature of stablecoins with EURK today!
