What are Perpetual Futures, also known as Perps?

Perpetual Futures (“Perps”) are derivative contracts without an expiration date. They allow traders to speculate on the underlying asset prices indefinitely. The critical item to note is that with a Perps contract you DO NOT OWN the underlying asset. Perps contracts are different from Synthetic Futures Contracts. Perps have recently come into the news as the CFTC recently approved Kalshi to start trading crypto perpetual futures. Trading volume on Kalshi exploded in the first week with over $1 billion in activity. One of the biggest bets was on the SpaceX IPO. Not everyone is happy about this. The CFTC chair Michael Selig went onto CNBC to plead his case and justify the approval. Shortly thereafter, CME CEO Terrence Duffy announced that CME will be suing CFTC over Perps approval. CME argues that Perps are swap contracts. Perps originally gained popularity in foreign countries with crypto traders as exchanges such as Hyperliquid and Binance began offering this product back in 2016. This episode examined articles from CNBC and Investopedia.