Spot vs Perpetual Futures: How Crypto Trading Differs

In brief

Spot trading generally exchanges the assets themselves. Perpetual futures provide exposure through a contract without a scheduled expiry, often using collateral, funding payments, and liquidation rules. The two products have different costs and risks.

A derivative position is not the same as owning the underlying token.
Leverage magnifies exposure relative to collateral; it does not create a better trade.
Funding, fees, margin rules, and liquidation conditions are product-specific.

What is spot trading?

Spot trading exchanges one asset for another at the available market price or under specified order conditions. In a simple unleveraged token purchase, you pay for the tokens you receive. Their value then changes with the market.

How the tokens are held depends on the product’s custody and settlement model. A blockchain swap and a balance credited by a custodial exchange are not identical arrangements. Confirm what you are receiving and where it is held.

Unleveraged spot ownership generally does not have margin liquidation solely because the price falls. That does not make the asset safe: a token can lose most or all of its value, and there may be insufficient liquidity to sell it.

What are perpetual futures?

Perpetual futures are derivative contracts that generally have no scheduled expiry. They provide exposure to a reference market through a contract rather than necessarily delivering the underlying asset. Many perpetual markets allow long and short positions and use recurring funding payments to help align the contract price with a reference price.

A position is supported by collateral. Where leverage is used, its notional exposure is larger than the collateral committed. The product’s margin rules determine the collateral required and when the position may be liquidated.

The mark price used for margin calculations can differ from the latest traded price. Index construction, funding intervals, supported collateral, and liquidation procedures all depend on the specific market.

The practical differences

What you hold

A spot purchase generally results in the acquired asset or an account claim to it, depending on custody. A perpetual position represents contractual exposure. You should not assume holding an ETH perpetual gives you ETH that can be transferred or used elsewhere.

How costs accumulate

Both products can involve trading fees, price impact, and slippage. Onchain transactions can also incur network costs. Many perpetuals additionally involve funding payments while a position remains open. A trader may pay or receive funding according to the prevailing rate, position direction, and contract rules.

Funding is not a universally fixed fee. It can change and may turn a position that looks attractive on price alone into a different economic outcome.

How a position can close

A normal spot holding is usually reduced by selling or transferring the asset. A leveraged derivative may be closed by the trader or liquidated when it no longer satisfies margin requirements. Some products use additional mechanisms for exceptional market conditions; read the specific rules.

A simple leverage example

Suppose a linear contract gives a trader $1,000 of exposure against $200 of collateral. That is 5× notional exposure relative to the collateral. A 2% change in the reference price corresponds to roughly $20 of price-based profit or loss, or 10% of that initial collateral, before costs and other effects.

This simplified example is not a liquidation-price calculation. Maintenance margin, funding, fees, mark price, collateral value, and position changes can all affect when liquidation occurs. Different contract designs may have different payoff calculations.

Cross margin and isolated margin

Where offered, isolated margin allocates collateral to a specific position or defined set of positions. Cross margin allows eligible account collateral to support multiple positions. The exact implementation varies.

Cross margin can link the risk of positions that appear separate. Isolated margin does not guarantee that the full account is protected under every possible product rule. Check the actual collateral and loss-handling arrangement rather than relying on the label alone.

Questions to answer before entering

Am I acquiring a token or opening a derivative contract?
Which price is used to calculate margin and liquidation?
What fees, funding, and network costs apply?
Which collateral is used, and can its value change?
What happens if my exit order cannot fill at the expected price?

Read slippage versus price impact for execution context. Zily includes derivatives and perpetual futures within its broader crypto trading toolkit; use the actual product interface to confirm current instruments and rules.