The Core Difference
Binance offers two futures products: Perpetual contracts and Quarterly delivery contracts. Their biggest difference comes down to one thing: whether or not there is an expiration date.
- Perpetual contracts: No expiration date — you can hold the position indefinitely until you manually close it or get liquidated
- Delivery contracts: Fixed expiration date (typically the last Friday of each quarter) — the system automatically settles at expiry
Perpetual Contracts Explained
Features
Perpetual contracts are by far the most popular futures product on Binance, accounting for over 90% of all futures trading volume.
No expiration date: After going long on a BTC perpetual contract, you can hold it for a day, a week, a month, or even longer — entirely your choice (as long as you are not liquidated).
Funding rate mechanism: Since perpetual contracts have no expiration date, how does the contract price stay aligned with BTC's spot price? The answer is the "funding rate" mechanism.
What Is the Funding Rate
Every 8 hours (at 00:00, 08:00, and 16:00 UTC each day), a funding rate settlement occurs between perpetual contract holders:
- When the funding rate is positive: Longs pay shorts. This indicates too many traders are long, and the payment helps restore balance
- When the funding rate is negative: Shorts pay longs. This indicates too many traders are short
Impact on you: If you hold a perpetual position overnight or for multiple days, the funding rate becomes an ongoing cost or income stream. During bull markets, going long typically means paying funding; during bear markets, going short typically means paying.
Rate magnitude: Usually between 0.01% and 0.03% per 8-hour period. It seems small, but it adds up over time. At 0.01% per 8 hours, holding for one month costs about 0.9%.
Best Use Cases for Perpetual Contracts
- Short-term trades (minutes to days)
- Day trading
- Trend-following strategies
- Hedging spot holdings
Delivery Contracts Explained
Features
Delivery contracts have a fixed expiration date, typically the last Friday of each quarter (March, June, September, December).
Automatic settlement at expiry: At expiration, the system settles your P&L based on the mark price at that time. No manual action is needed. If you do not want to wait until expiry, you can close your position early.
No funding rate: Delivery contracts do not charge a funding rate. Instead, there may be a "basis" — a difference between the contract price and the spot price.
What Is the Basis
The difference between a delivery contract's price and the spot price is called the "basis":
- In bull markets, delivery contract prices are usually above spot (positive basis) because the market expects prices to continue rising
- In bear markets, delivery contract prices may be below spot (negative basis)
- As the expiration date approaches, the basis narrows toward zero
Best Use Cases for Delivery Contracts
- Medium to long-term positions (holding for weeks to months without paying funding rates)
- Basis arbitrage strategies
- Hedging price risk at a specific future date
Side-by-Side Comparison
| Factor | Perpetual | Delivery |
|---|---|---|
| Expiration | None | Quarterly |
| Holding period | Unlimited | Before expiry |
| Funding rate | Yes (every 8h) | None |
| Basis | Minimal | Can be significant |
| Trading volume | Very high | Relatively low |
| Liquidity | Best | Less than perpetual |
| Available pairs | Many | Few (mainly BTC, ETH) |
| Complexity | Medium | Medium-high |
| Beginner-friendly | Relatively more so | Not recommended |
Which Should Beginners Choose
Choose perpetual contracts. Here is why:
- Best volume and liquidity: Easier fills and smaller slippage
- More intuitive: No need to worry about expiration dates
- More coin options: Nearly all major cryptocurrencies have perpetual contracts
- More learning resources: Most futures tutorials online are based on perpetual contracts
Delivery contracts are better suited for experienced traders using specific strategies (such as basis arbitrage or long-term hedging). Beginners do not need them.
Practical Tips on Funding Rates
If you use perpetual contracts:
Short-Term Trades: Do Not Worry About It
If your holding period is a few hours to a day or two, the funding rate impact is negligible. A 0.01% rate on a 1,000 USDT position is just 0.1 USDT.
Long-Term Positions: Pay Attention
If you plan to hold for more than a week, factor in the cumulative funding cost. You can check the current and historical funding rates on the contract trading page.
How to Check Funding Rates
In the contract information section of the futures trading page, you will see the "Current Funding Rate" and a countdown to the next settlement. Historical funding rate data is also available on the contract info page.
Extreme Funding Rates as a Signal
When the funding rate is very high (e.g., above 0.1%), it signals that market sentiment is heavily skewed in one direction. This often hints that a reversal may be approaching. However, treat this as just one reference indicator — not a sole basis for trading decisions.
Final Reminder
Whether you choose perpetual or delivery contracts, the core risk remains the same: leverage amplifies losses, and you can quickly lose your entire margin. Choosing the right contract type will not make you profitable, but choosing the wrong one adds unnecessary complexity. Beginners should start with perpetual contracts, use low leverage, and keep position sizes small while building experience.