What are perpetual futures? Perps, leverage and liquidation explained by Sparkling Trading
Perpetual futures, or perps, are derivatives with no expiry date that let traders take leveraged long or short positions on an asset's price. Sparkling Trading explains how leverage, funding and liquidation work. Information only: perps are not available in every jurisdiction.
Key takeaways
- A perp is a contract on an asset’s price that never expires, so the holder owns a position, not the asset itself.
- Leverage enlarges gains and losses by the same factor, and a liquidation can wipe out the entire margin.
- Funding payments between long and short holders keep a perp’s price close to the underlying price and become an ongoing cost or income.
- Maximum leverage on Hyperliquid and similar venues is set per market by the venue and can change, so it is never a fixed number.
What is a perpetual future?
A perpetual future is a derivative contract that tracks the price of an underlying asset, such as a crypto asset, without a settlement date. A traditional future ends on a fixed day. A perp can stay open as long as the holder keeps enough margin behind it. Margin is the balance set aside to support the position.
A trader who expects the price to rise opens a long position. A trader who expects it to fall opens a short position. Neither owns the asset. Each only gains or loses as the price moves. Searches for “Hyperliquid perpetual futures”, “Hyperliquid perps” and “Hyperliquid futures” all refer to this contract type, traded on one onchain venue.
How does leverage work?
Leverage lets a position be larger than the margin behind it. Purely as an arithmetic example, with 100 units of margin and 5x leverage, the position is worth 500 units. A 1 percent move against it costs 5 units, which is 5 percent of the margin. The same multiplier applies to gains, which is why leverage magnifies outcomes in both directions.
What is Hyperliquid maximum leverage?
Hyperliquid is a third-party onchain venue where perps are traded. Its maximum leverage is not one figure for the whole venue. Each market has its own cap, which the venue sets and may change. Markets with thinner liquidity or higher volatility generally allow less leverage than deeper ones. Because limits move, this page quotes no numbers: check the venue’s current market list for the cap on any given market.
A cap is a ceiling, not a target. Higher leverage places the liquidation price closer to the entry price, so even a small move can close the position.
What happens at liquidation?
If losses reduce the margin below the level the venue requires, the venue closes the position by force. This is liquidation. The margin that supported the position can be lost in full, and fast markets can make the outcome worse than the displayed liquidation price suggests.
| Term | Meaning | Why it matters |
|---|---|---|
| Margin | Balance set aside to support a position | It is the amount at risk |
| Leverage | Position size divided by margin | Multiplies gains and losses |
| Liquidation price | Price at which the venue closes the position | Moves closer to entry as leverage rises |
| Funding | Periodic payment between long and short holders | An ongoing cost or income |
| Slippage | Gap between expected and actual fill price | Larger in thin or fast markets |
What is funding in perpetual futures?
Because a perp never expires, a funding mechanism keeps its price near the price of the underlying asset. At regular intervals, one side pays the other, depending on market conditions. When many traders are long, longs usually pay shorts, and the reverse when shorts dominate. For a position held a long time, funding can add up to a meaningful cost.
How do perps differ from spot and options?
| Feature | Spot | Perpetual futures | Dated futures |
|---|---|---|---|
| What you hold | The asset itself | A position on its price | A position on its price |
| Expiry | None | None | Fixed settlement date |
| Leverage | No | Yes, per market | Usually yes |
| Direction | Mainly rising prices | Long or short | Long or short |
| Ongoing cost | None | Funding | Price gap to spot until expiry |
| Worst case | Loss of the asset’s value | Liquidation of the margin | Liquidation or forced settlement |
How does Sparkling Trading relate to perps?
Sparkling is the trading app that comes with an agent: swaps, perps and prediction markets from one self-custodial balance. Perps are traded on Hyperliquid, a third-party market that Sparkling connects to. Availability of individual features depends on the jurisdiction, and perps are not available in every jurisdiction. Nothing on this page is an invitation to trade them.
Sparkling is a self-custodial software interface operated by Swarming Labs Ltd (BVI). Sparkling never holds user funds. The agent prepares a trade and shows it as a trade card with the asset, amount, venue, price, slippage, fees and a risk check. Only the user’s confirmation leads to signing. The language model never sees keys and cannot sign, and if something fails, nothing is executed. Sparkling charges a fee on trades, and each card shows fees before confirmation. Deposits and perp trading are gasless.
What are the main risks of perpetual futures?
- Liquidation: a leveraged position can be closed by force, with the margin lost.
- Volatility: prices can move sharply between reviewing a trade and confirming it.
- Funding costs: they accumulate while a position stays open.
- Venue risk: a third-party market can suffer outages, market stress or technical faults.
- Slippage: the fill can differ from the displayed price.
- Scams: never share your seed phrase, whatever a message or site claims.
Perps are not suitable for everyone. A risk check summarises risks but does not replace your own judgement, and trades prepared by the agent are not recommendations. Tax rules may apply to derivatives activity, so consult official guidance or a professional.
Frequently asked questions
What are Hyperliquid perps?
They are perpetual futures traded on Hyperliquid, an onchain venue. The contract has no expiry and tracks an underlying asset’s price with leverage.
What is the maximum leverage on Hyperliquid?
It differs by market and is set by the venue, which can change it. This page quotes no figure, so check the venue’s current limits.
Can I lose more than my margin?
The margin behind a position can be lost entirely through liquidation. How the venue handles losses beyond that depends on its rules, so read them before relying on any assumption.
Are perps available everywhere?
No. Perps are not available in every jurisdiction. Availability of individual features depends on the jurisdiction.
Can the Sparkling agent open a perp position on its own?
No. The agent prepares a trade card, and nothing is signed or executed without the user’s confirmation.
Author: George Kasparyants · Published: 22 October 2026
Sparkling is a self-custodial interface to third-party markets. It does not hold user funds, execute trades without your confirmation, or provide investment, tax or legal advice. Trades prepared by the agent are not recommendations. Perpetual futures, prediction markets and tokenized stocks carry substantial risk, including the loss of all funds. Tokenized stocks are issued by third parties and confer no shareholder rights. Some services, including xStocks, are unavailable in certain jurisdictions, including the United States and the United Kingdom.
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