Basic Knowledge of Perpetual Contract
Currently, the most popular and common derivative in crypto world is perpetual contract. Although you can also find options, futures and other derivatives on Derify protocol in the future.
Perpetual contracts allow traders to speculate on the future price of a certain asset by buying (long position) or selling (short position) perpetual futures contracts, the profit comes from the price difference. Unlike typical futures contract, perpetuals do not expire and remain effective until the trader closes their position (hence the name).
The price of perpetual contracts will often diverge from the spot market. These deviations may signal sentiment on the exchange - if traders expect the underlying asset to increase in value over time, the price of the perpetual contract will likely exceed the spot price, and vice versa.
However, the perpetual contract price tends to return to the spot market price, profit-seekers (known as arbitrageurs) may come to the market, buy or sell a derivative elsewhere, and long or short that derivative on Derify protocol, eventually benefit from the price difference.
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