What is Liquid Perpetuals?
Liquid Perpetuals is a new place on Liquid to trade Bitcoin perpetual contracts. There are a lot of moving parts that make up Liquid Perpetuals. We'll go over the common terminology and the most important parts of Liquid Perpetuals so you know how it all works.
What is Perpetual Contract?
- Perpetual contracts do not have an effective settlement date. Instead Perpetuals settle regularly but are then reinstated and continue under the same product label/ticker in perpetuity until the customer decides to close the trade or liquidation occurs.
- The liquidation mechanism depends on an index, not a single spot price or single order book. An index is a composite or average price derived from up to 5 different source spot prices coming from trustworthy exchanges, including Liquid. The advantage here is that a sudden price swing in one spot exchange does not impact the index or the impact is much less severe.
The primary mechanism that ties spot price to perpetuals, is Perpetual Swap.
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