What is the difference between a delivery contract account and a perpetual contract account?

As a cryptocurrency exchange, there are many ways to trade derivatives, but delivery contract accounts and perpetual contract accounts are often confused by investors, and it is even difficult to understand what is the difference between a delivery contract account and a perpetual contract account? According to the data, the delivery contract is a futures contract with a specific expiration date (delivery date), while the perpetual contract is a contract with no expiration date. Traders can trade at any time. The differences between the two The main differences are in three aspects: maturity date, funding fee and price setting. Next, the editor will talk about it in detail.

What is the difference between a delivery contract account and a perpetual contract account?

The difference between a delivery contract account and a perpetual contract account is mainly in three aspects: expiry date, capital fee and price setting. The delivery contract is a contract product settled with digital assets. Investors can buy it. Go long or sell short to obtain profits from the increase or decrease in the price of digital assets. The delivery contract has a fixed delivery period, which are the current week, the next week, the current quarter and the second quarter.

Perpetual contracts are a kind of derivatives based on digital assets. Investors can make profits based on the rise and fall of digital asset prices by buying long or selling short. Unlike traditional futures contracts, perpetual contracts have no expiration date and can continue to trade, providing investors with greater flexibility and opportunities. The characteristics and operating principles of perpetual contracts will be discussed in detail below.

1. Expiration date:

The main difference between perpetual contracts and delivery contracts is that perpetual contracts do not have a fixed delivery date, while delivery contracts will be delivered on a specific date. In a perpetual contract, the holder can hold the contract until he chooses to close or liquidate the position, while the delivery contract must be settled on the agreed delivery date. In addition, the price of a perpetual contract is usually closer to the spot price of the underlying asset because its price is affected by the funding rate, while the price of the delivery contract is determined by the index price in the last hour. These distinctions play a key role in traders developing investment strategies and risk management.

2. Funding fee:

Since the perpetual contract has no expiration and delivery date, a "funding fee mechanism" is needed to anchor the contract price to the spot price.

3. Price setting:

The perpetual contract benchmarks the spot price and uses the marked price to calculate the user's unrealized profit and loss, effectively reducing unnecessary frequent liquidation during market fluctuations.

Which one is better, perpetual contract or delivery contract?

Relatively speaking, perpetual contracts are better because they are less risky and more suitable for novice investors. Both perpetual contracts and delivery contracts have their own advantages and disadvantages. Which one is better depends on the investor himself. preferences. The delivery contract is a standardized contract, which means that the delivery contract has a clear expiration date and delivery method. Investors need to choose whether to exercise the contract before the expiration date of the contract. If they exercise the contract, they need to deliver according to the delivery method specified in the contract. A significant advantage of delivery contracts is that investors can obtain the underlying assets on the delivery date. This is important for investors who actually need the underlying asset, such as commodities traders who need physical delivery of their commodities. In addition, delivery contracts can be bought and sold before delivery, and investors can make profits by trading the contracts themselves.

There are also some shortcomings in delivery contracts. First, delivery contracts have clear expiration dates, which limits investors’ trading flexibility. Investors must make decisions before the contract expires and cannot flexibly make adjustments based on market conditions. In addition, delivery contracts require physical delivery, which means investors need to make logistics and warehousing arrangements. For some non-physical products, such as financial indices, delivery contracts may not be applicable.

Compared with delivery contracts, perpetual contracts are contracts with no expiration date. This means that investors can hold the contract for a very long time without worrying about the delivery pressure caused by the expiration date. The delivery method of perpetual contracts is usually cash delivery rather than physical delivery. This design makes perpetual contracts more suitable for some financial products, such as cryptocurrencies.

Perpetual contracts also have advantages in trading flexibility. Investors can buy or sell a contract at any time, either at the beginning of the contract or while the contract is held. This allows investors to make trading adjustments based on market conditions and their own judgment. Moreover, in perpetual contracts, investors can amplify returns through leveraged trading.

Perpetual contracts also have some risks. Since the contract has no expiration date, investment risks may increase if investors do not set up risk management measures. In addition, the price of perpetual contracts often deviates from the price of the underlying asset, which may cause investors to suffer losses in the transaction.

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