GlossaryIntermediate
Linear Perpetual
A perpetual futures contract denominated and settled in a stablecoin, generally producing a more straightforward, directly proportional profit-and-loss profile.
A linear perpetual is a perpetual swap (see Kaavon's "Perpetual Swap" glossary definition) contract denominated and settled in a stablecoin rather than the underlying crypto asset itself, producing a profit-and-loss profile that moves directly and proportionally with the underlying asset's price change.
This is generally considered more straightforward to reason about than an inverse perpetual (see Kaavon's "Inverse Perpetual" glossary definition), since a stablecoin-denominated gain or loss doesn't itself fluctuate in value the way a crypto-denominated one does.
Examples
- A linear perpetual's stablecoin-denominated profit and loss moves directly and proportionally with the underlying asset's price change.
- Linear perpetuals are generally considered easier to reason about than inverse perpetuals, since the settlement currency itself doesn't fluctuate in value.