Perpetual Futures
Perpetual Futures are cash (stablecoin) settled contracts that are non-expiry. Trading perpetual futures are similar to margin - based spot trading, except no interest rate is applied to you position.
Price of a perpetual future may diverge from an underlying asset price (index price). When traders expect underlying asset to go up in price, future may be traded at a premium. Otherwise, when market players expect underlying asset price to go down, future may be traded with a discount.
To keep to price of the future closed to an index price, a funding payment is used.
Funding Mechanism
Every hour, traders with open long or short positions will pay each other a funding payment, depending on market conditions. If the contract price is above the spot price, longs will pay shorts. If the contract price is below the spot price, shorts will pay longs. This incentivizes traders to take the unpopular side of the market.