GlossaryAdvanced
Inverse Perpetual
A perpetual futures contract denominated and settled in the underlying crypto asset itself, rather than in a stablecoin or fiat-pegged unit.
An inverse perpetual is a perpetual swap (see Kaavon's "Perpetual Swap" glossary definition) contract denominated and settled in the underlying crypto asset itself — for example, a Bitcoin inverse perpetual's profit and loss are paid in BTC, not in a stablecoin.
This is a meaningfully different exposure than a linear perpetual (see Kaavon's "Linear Perpetual" glossary definition): an inverse perpetual's profit, measured in the underlying asset, behaves non-linearly as the asset's price itself changes, a real complexity worth understanding before trading one.
Examples
- A Bitcoin inverse perpetual settles profit and loss in BTC itself, meaning a trader's gains are measured in an asset whose own price is also moving.
- Inverse perpetuals produce a non-linear profit-and-loss profile relative to price changes, a real complexity distinct from a linear perpetual's more straightforward exposure.