Getting Started with Gate Futures Trading: Perpetual Contracts and Delivery Contracts, Which Should You Choose?

Perpetual contracts and delivery contracts are two of the most core products in cryptocurrency derivatives trading. About 75% of global cryptocurrency futures trading occurs in the perpetual contract market.

Understanding their core differences is fundamental to developing effective trading strategies.

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Core Concepts: Start with Definitions

A perpetual contract, as the name suggests, is a type of futures contract with no expiration date. Traders can hold positions indefinitely and will not be forced to deliver as long as the margin is sufficient. Its price is anchored to the spot price through a mechanism called the “funding rate” to prevent the two from deviating too much.

Delivery contracts have a fixed expiration date (e.g., current week, next week, quarter). On the specified date, all open positions will be automatically closed for delivery at the final settlement price, regardless of profit or loss. It is closer to the concept of futures in traditional finance.

Key Differences: A table to see the essence

For a visual comparison, here is a summary of the core features of the two contracts:

In-depth analysis of the core mechanism

1. Funding rate of perpetual contracts: the balancing technique between long and short

This is a mechanism unique to perpetual contracts. You can think of it as an agreement between bulls and bears to periodically “pay” in order to keep the contract price not too far away from the spot.

• Rate Calculation: Funding Rate = Notional Value of Positions × Funding Rate. The funding rate itself consists of two parts: interest rate and premium, which will be dynamically adjusted according to the price difference between the contract and the spot.
• Payment Direction:
  • When the funding rate is positive, the long pays the short. This usually occurs when market sentiment is extremely bullish and the price of perpetual contracts is significantly higher than spot, suppressing excessive longs through fees.
  • When the funding rate is negative, the short pays the long. This usually happens when the market is pessimistic and the contract price is lower than the spot price.

For example, if you hold a long position in BTC perpetual contracts on Gate, if the fee rate continues to be positive, the long-term holding cost will increase. Conversely, if the rate is negative for a long time, holding a short position may incur additional costs. Traders need to factor this into profit and loss considerations.

2. Expiration Date of Delivery Contracts: Time is the rule of the game

Trading for delivery contracts revolves around a “clock”.

• Contract cycle: Common ones include current week, next week, current quarter, second quarter, etc. A code like “BTCUSDT0328” usually means that the contract will expire on March 28.
• Delivery Process: Before expiration, the contract price may have a basis between market expectations and spot. At the time of delivery (e.g., every Friday at 08:00 UTC), the platform will use the arithmetic average of the spot index over a period of time as the final delivery price to settle all open positions. For example, on Gate, the contract can only be closed but not opened near delivery, and the trade will be automatically interrupted and resumed.

Fee Structure: Calculate your transaction costs

In addition to market price fluctuations, fees are a key factor in eroding profits. The fee structure differs between the two contracts:

• Common Fees: Transaction fees. Regardless of the contract, there will be a fee for execution, which is usually divided into the taker rate for active execution and the maker rate for maker orders to provide liquidity. For example, a platform’s standard rate might be 0.055% for Taker and 0.02% for Maker.
• Featured Fees:
  • Perpetual Contracts: Funding fees. This is the cyclical cost or benefit of holding a position and occurs every 8 hours.
  • Delivery Contract: Settlement Fee. Some platforms will charge a fixed percentage (e.g., 0.05%) settlement fee when the system automatically delivers and closes positions.

Before trading on Gate, be sure to check the latest specific rate standards in the official Help Center.

How to Choose: Match your trading style

Choose perpetual contracts if your strategy is:

• Trend Following vs. Long-Term Holding: Optimistic about a long-term trend and not wanting to be interrupted by an expiration date.
• Flexible short-term trading: Requires the need to enter and exit the market at any time, pursuing flexibility.
• Arbitrage trading: Arbitrage using the instantaneous price difference between contracts and spot or different platforms.
• Note: The funding rate must be taken as a core consideration when calculating the long-term holding cost.

Choose a delivery contract if your strategy is:

• Have a clear time window for judgment: For example, have strong expectations for the price of the coming week or quarter.
• Futures and cash arbitrage: Use the rule that the delivery contract must converge at the spot price at expiration to carry out arbitrage operations.
• Avoiding Funding Fees: Not wanting to be disrupted by complex funding rates and preferring a defined fee structure.
• Note: The expiration date must be strictly managed to avoid automatic settlement due to forgetting to close the position.

Risk and Risk Control: A Common Lifeline

Regardless of the contract you choose, high leverage is a double-edged sword. Both employ mechanisms such as maintenance margin, forced liquidation, insurance funds, and automatic deleveraging to manage the overall risk of the platform.

When trading on Gate, understanding and using stop-loss and take-profit, setting leverage reasonably (never blindly using the highest leverage), and monitoring margin ratios in real time are the prerequisites for survival and profitability.

Future Outlook

In the volatility of the crypto market, the trading volume of perpetual contracts often dominates, with data showing that nearly three-quarters of the world’s cryptocurrency futures trading volume comes from this endless futures market. Delivery contracts play the role of stabilizers and time anchors in traditional financial structures.

When you make a choice on Gate’s trading interface, it’s not just clicking a button, it’s choosing a time frame and a set of game rules for your funds.