Perpetual Futures Explained: Mark, Index and Last Price
Lesson 2 of 9 · Intermediate
What are crypto futures? The two main families
A futures contract is an agreement to buy or sell an asset at a set price without moving the asset itself right now. You trade the change in price, not ownership of Bitcoin. In crypto there are two main families:
- Dated futures: these have an expiry date, such as a monthly or quarterly contract. On expiry day the contract price converges to the spot reference price and the contract settles. Bitcoin contracts on CME are of this type.
- Perpetual contracts (perps): these have no expiry and stay open as long as you hold enough margin. They were born on crypto exchanges, and today a large share of Bitcoin trading volume happens in them.
Because a perp has no expiry, something else has to keep it close to the spot price. In a dated contract the expiry date does that job; in a perp, funding does. Before that, you need to know which price the exchange uses to calculate your profit, loss and liquidation.
Three prices: index, mark and last
On a perpetual contract's trading screen you will usually see three numbers, and knowing the difference prevents nasty surprises:
- Last price: the price of the most recent trade on this contract on this exchange. Your chart usually shows this, and a single large order in a thin order book can make it jump for a moment.
- Index price: a weighted average of the spot price of the same asset across several selected exchanges. It aims to represent the "true market price" and is harder to manipulate through any single venue.
- Mark price: the price the exchange uses to calculate unrealised profit and loss and liquidation. It is usually built from the index plus a smoothed component of the gap between the perp and spot. The exact formula differs by exchange.
The practical consequence: the last price may touch your liquidation level without you being liquidated, or the reverse, you may see distance left on the chart while the mark price reaches the level first. On many exchanges you can trigger a stop on either the last price or the mark price; choose that deliberately.
One more important point: index and mark prices are only as reliable as the data feeding them. If an exchange uses its own order book to value a type of collateral, and that book empties out in a crisis, collateral values get miscalculated. That was exactly part of the story of October 10, 2025, which the liquidation lesson examines.
Why does a perp stay tied to spot?
The main mechanism is the funding rate: a periodic payment between holders of long and short positions.
- If the perp trades above the index (strong leveraged buying demand), funding usually turns positive and longs pay shorts. Holding a long becomes expensive and shorting becomes more attractive.
- If the perp trades below the index, funding turns negative and shorts pay longs.
Arbitrage helps too: when the perp is more expensive than spot, some traders buy spot and sell the perp to collect funding. That two-sided pressure keeps the gap limited. But "limited" does not mean "zero". In euphoric markets a perp can trade at a meaningful premium to spot for some time, and funding can put a heavy cost on leveraged positions.
Dated futures have no funding. Instead, the gap between the contract and spot shows up as the basis in the price itself and shrinks to zero by expiry. We cover this in the basis and CME lesson.
Linear, inverse and decentralised perps
Perps come in two common collateral types:
- Linear: collateral and profit and loss are in a stablecoin or dollars. The math is simple and profit or loss moves in direct proportion to price.
- Inverse: collateral is the crypto asset itself, for example Bitcoin. When price falls, a long position loses and the value of the collateral falls too, so a leveraged long on an inverse contract is doubly sensitive to declines.
Perps are no longer found only on centralised exchanges. According to Crypto Briefing in September 2026, Hyperliquid held about 9% of total perpetual futures open interest, and on-chain perps accounted for roughly 12% of perp volume. These platforms also carry leverage, liquidation and oracle (price source) risk, plus smart contract risk and the risks covered in the DeFi course. "Decentralised" does not mean "lower risk".
Risk warning: no expiry means no time limit on losses
Risk warning: perps are almost always traded with leverage, and a position can be closed with the loss of the entire margin once the mark price reaches the liquidation level. Having no expiry does not mean you can "wait for it to come back"; every hour the position is open you pay or receive funding, and every adverse move brings you closer to liquidation. This lesson is educational and is not trading advice.
If your goal is simply to own Bitcoin, spot (unleveraged) carries no liquidation risk. Futures are tools for hedging and short-term trading, and they only make sense after you fully understand the margin math.
Common mistakes
- Assuming liquidation happens at the last chart price, when most exchanges use the mark price.
- Holding a perp for weeks or months without counting the cumulative funding cost.
- Treating linear and inverse contracts as the same; in an inverse contract the collateral value moves with price too.
- Believing that having no expiry means a losing position can be held until price returns.
- Assuming decentralised perps are low risk simply because there is no centralised intermediary.
What do volume and data say here?
Perps are the biggest source of crypto market data, and a few simple comparisons clarify a lot:
- Perp premium to spot: track the gap between the perp price and the index. A high, persistent premium means heavy leveraged buying demand; a discount means leveraged selling pressure.
- Perp volume vs spot volume: if a move happens almost entirely on perp volume while spot volume does not join in, it is mostly leveraged position shifting rather than real buying and selling of the asset.
- Check the index source: exchanges usually publish which venues make up the index and the mark price formula. Read it once so you know what data your liquidation depends on.
None of this predicts price direction; it only shows what the current move is built on.
📊 See real gold futures volume behind these ideas: free order flow course · today's gold volume map
Frequently asked questions
What are crypto futures and how do they differ from spot?
On spot you buy the asset itself, own it, and cannot be liquidated. On futures you trade the change in a contract's price, usually with leverage, and if losses reach the maintenance margin the position is closed by force.
What is the mark price and why does it differ from the chart price?
The mark price is what the exchange uses for unrealised profit and loss and liquidation. It is usually built from the index of several spot exchanges so that a momentary spike in one order book does not cause an unfair liquidation.
Which exchange is best for futures?
We do not recommend or rank any exchange. Each platform has its own counterparty risk, margin rules and legal limits, including the documented possibility of account or asset freezes for users in sanctioned regions.
Education only, not a recommendation to buy or sell; we never give signals. Price examples are illustrative. Test any method on a demo account first, with strict risk management.