Perpetual Futures

Perpetual futures, usually shortened to perps, let you take a leveraged long or short position on an asset without ever holding the asset itself. Unlike traditional futures, they have no settlement or expiry date, so the position can stay open for as long as you keep enough margin to support it.

What it actually means

A perp is a contract whose value tracks an underlying market, for example ETH or BTC. You post collateral (margin) and choose leverage, which multiplies both your exposure and your risk. Your profit and loss is marked to market continuously: as the contract price moves, your equity moves with it in real time. Because there is no expiry, the contract needs a separate force to stop its price from drifting away from the real market. That force is the funding rate.

How it works

A perp references two prices. The mark price is what the contract trades at, and the index price is the spot value of the underlying. Leverage lets a small amount of margin control a much larger notional position, so a modest price move produces an outsized change in your equity. When your margin can no longer cover your losses, the position is liquidated.

The funding rate is the tether. At regular intervals, traders on one side of the market pay traders on the other side, depending on whether the perp is trading above or below spot.

On Hyperliquid, all of this happens on-chain through a fully on-chain central limit order book. You see real bids and asks, your orders rest in a transparent book, and funding, margin, and liquidations are settled by the protocol rather than a custodial exchange.

Why it matters to you

• Leverage cuts both ways: it amplifies gains and losses equally, and it shortens the price move needed to liquidate you.
• Funding is a real, recurring cost or income that can quietly erode a profitable position if you hold it through a high funding regime.
• There is no expiry to force you out, so a forgotten position keeps accruing funding and liquidation risk until you act.
• Mark price, not your entry price, decides when liquidation triggers.

Real example

Suppose you open a 5x long on ETH on Hyperliquid with $1,000 of margin, giving you $5,000 of notional exposure. If ETH rises 4 percent, your position gains about $200, roughly a 20 percent return on your margin. If ETH instead falls 4 percent, you lose about $200, and a deeper drop moves you toward liquidation. Separately, if funding is positive at the next interval, say 0.01 percent on your $5,000 notional, you pay about $0.50 to the shorts. These figures are illustrative, not live values.

Common misconceptions

• "Perps expire like futures." They do not. They are designed to be held indefinitely.
• "Funding is a fee the exchange charges." It is a peer-to-peer payment between longs and shorts, not a protocol fee.
• "My entry price determines liquidation." Liquidation is driven by the mark price relative to your maintenance margin, not your entry.
• "Higher leverage means higher returns." It means higher returns and a much closer liquidation price.

How Otomato monitors it

Otomato detects your open Hyperliquid perp positions automatically from your wallet address, with zero setup and no signatures. Once detected, it watches the variables that actually move your risk: funding rate spikes that turn a position expensive to hold, liquidation proximity as the mark price approaches your maintenance margin, and limit order fills. You only hear from Otomato when something material changes. Silence means your positions are operating normally and nothing needs your attention.

Monitor this in your portfolio

Otomato detects your positions automatically and alerts you only when something material changes. No setup, no signatures.

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