# Perpetual Futures *Perpetual futures* (often abbreviated as "perps") are a type of futures contract that does not have an expiration date like traditional term futures contracts. This allows them to mimic the behavior of the underlying crypto asset. Perps are settled periodically, usually every few hours, through a mechanism called funding. The funding mechanism ensures the perp price remains closely aligned with the actual spot price of the underlying asset. In instances where the perpetual futures price diverges from the spot price, funding payments are exchanged between long and short position holders. This process incentivizes market participants and restores the price equilibrium with the spot market. Perpetual futures are typically categorized into linear futures contracts and inverse futures contracts. In the crypto market, linear futures contracts are also referred to as stablecoin contracts, as their pricing is denominated in USDT or USDC. In contrast, inverse futures contracts, often termed coin-margined contracts, use tokens like BTC or ETH as settlement currency. Since in base case Resolv treasury uses short futures positions, another thing to consider is what happens with short perps when underlying price moves. When price goes up, short position has unrealized losses and margin has to be topped up (more funds to be allocated to the exchange). Otherwise, the position will get liquidated (forced closure of the position by the exchange with immediate settlement of financial result) and the losses become realized. When price goes down, short position has unrealized gains. Since these gains are unrealized yet, there is a risk that exchange will not be able to make payments under the contract (payment default). It is a good idea to reopen the futures contract at new market levels to realize the gains and withdraw funds from the exchange to not carry that risk. --- # Agent Instructions: Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter: ``` GET https://docs.resolv.xyz/litepaper/useful-definitions/perpetual-futures.md?ask= ``` The question should be specific, self-contained, and written in natural language. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.