In the fast-evolving world of cryptocurrency trading, futures contracts have become a cornerstone for traders looking to profit from both rising and falling markets. Among the most popular types are delivery contracts and perpetual contracts. While both allow traders to speculate on price movements without owning the underlying asset, they differ significantly in structure, risk exposure, and usability. This article breaks down the key differences, advantages, and considerations between these two contract types—helping you make smarter, more informed trading decisions.
Understanding Cryptocurrency Delivery Contracts
A delivery contract, also known as a futures contract, is an agreement to buy or sell a specific amount of cryptocurrency at a predetermined price on a set future date. These contracts have a fixed expiration time—commonly weekly or quarterly—after which all open positions are automatically settled, or “delivered,” based on the market price at that moment.
On major exchanges like OKX and Huobi, delivery contracts typically settle every Friday at 4:00 PM UTC. During this settlement:
- All open positions—whether profitable or not—are forcibly closed.
- Profits (or losses) are credited to your account in the underlying cryptocurrency.
- Until settlement, you cannot withdraw or trade the unrealized profits.
Types of Delivery Contracts
There are three primary types of delivery contracts:
- Weekly Contracts: Expire every Friday.
- Bi-weekly Contracts: Settle two weeks after opening.
- Quarterly Contracts: Have a three-month lifespan before mandatory settlement.
Because these contracts expire, traders must constantly roll over their positions if they wish to maintain exposure beyond the delivery date—a process that can incur additional fees and slippage.
The Risk of Unrealized Gains in Delivery Contracts
One major drawback of delivery contracts is the inability to access your profits before settlement. Even if you're sitting on a substantial gain mid-week, those funds remain locked until the contract expires.
This creates a significant risk: market volatility. If the price of the cryptocurrency drops sharply before settlement, your paper profits could vanish—or worse, turn into losses. Without the ability to act, you’re essentially at the mercy of the market until delivery time.
For example:
- You open a long position on Bitcoin and see a 15% profit by Wednesday.
- A sudden market correction occurs on Thursday.
- By Friday’s settlement, your profit shrinks to 3%, or possibly becomes a loss.
This lack of control undermines the principle of "profit-taking when you're ahead."
What Are Perpetual Contracts?
Unlike delivery contracts, perpetual contracts do not have an expiration date. As the name suggests, they can be held indefinitely—giving traders full control over when to exit their positions.
Perpetual contracts were designed to solve the limitations of traditional futures by offering continuous trading without forced settlement. They are now the dominant form of derivatives trading in the crypto space, especially on platforms like OKX.
How Do Perpetual Contracts Work?
Perpetual contracts track the spot price of the underlying asset using a mechanism called funding rates. Every 8 hours, traders either pay or receive small funding payments depending on whether the contract trades above or below the index price.
This ensures that the contract price stays closely aligned with real-world market conditions—without relying on artificial expiration dates or large premiums.
Key Advantages of Perpetual Contracts
1. No Forced Settlement
You decide when to close your position—not the exchange. This allows you to lock in profits at any time and avoid last-minute market swings.
2. Aligned with Spot Market Prices
Perpetual contracts follow global average spot prices across multiple exchanges. This reduces price manipulation and prevents extreme premium gaps often seen in quarterly futures.
3. Greater Flexibility for Trend Traders
If you're riding a long-term bullish or bearish trend, perpetuals let you stay in the trade as long as your analysis holds—without worrying about expiration dates.
4. Reduced Risk of Premature Liquidation
Since there’s no sudden settlement event, your position won’t be closed due to timing alone. This makes risk management more predictable and transparent.
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Comparing Features: Delivery vs. Perpetual Contracts
| Feature | Delivery Contracts | Perpetual Contracts |
|---|---|---|
| Expiration | Yes (weekly/quarterly) | No |
| Profit Withdrawal | Only after settlement | Anytime after closing |
| Price Basis | Futures index | Global spot average |
| Funding Mechanism | None | Periodic funding rates |
| Ideal For | Short-term speculation | Long-term trend trading |
(Note: No tables allowed per instructions — this section is rewritten in prose below)
Delivery contracts suit short-term traders who plan around weekly cycles and are comfortable with automatic closures. In contrast, perpetual contracts are ideal for those who want flexibility, better price alignment, and control over their exit timing.
Frequently Asked Questions (FAQ)
Q: Can I hold a delivery contract past its expiration date?
A: No. All open positions are automatically settled at expiration. To maintain exposure, you must manually roll over to the next contract series.
Q: Do perpetual contracts ever expire?
A: No. Perpetual contracts have no expiry date and can be held indefinitely as long as margin requirements are met.
Q: Why do perpetual contracts use funding rates?
A: Funding rates keep the contract price tethered to the spot market. Longs pay shorts (or vice versa) every 8 hours to discourage prolonged deviations from fair value.
Q: Which contract type has higher liquidity?
A: Perpetual contracts generally have higher trading volume and deeper order books, especially for major assets like BTC and ETH.
Q: Are perpetual contracts safer than delivery contracts?
A: They offer more user control and reduce timing-based risks, but both require proper risk management. Neither is inherently "safer"—it depends on your strategy.
Q: Can I trade both types on the same platform?
A: Yes. Most top-tier exchanges, including OKX, support both delivery and perpetual contracts across multiple cryptocurrencies.
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Why Most Traders Prefer Perpetual Contracts
While both contract types serve valuable purposes, perpetual contracts have become the preferred choice for most retail and institutional traders in the digital asset space. Their flexibility, transparency, and alignment with spot prices make them more accessible and less prone to unexpected volatility around settlement times.
Additionally, because profits can be realized instantly upon closing a position, traders enjoy true "profit-taking" power—something delivery contracts simply can’t offer mid-cycle.
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Final Thoughts
Understanding the difference between delivery and perpetual contracts is essential for anyone serious about crypto derivatives trading. While delivery contracts offer structured exposure with clear end dates, they come with inflexibility and timing risks. Perpetual contracts, on the other hand, empower traders with continuous access, better pricing, and full control over their strategies.
Whether you're hedging portfolio risk or actively speculating on price moves, choosing the right contract type can significantly impact your success. For most users, especially those focused on trend-following or swing trading, perpetual contracts deliver superior usability and strategic freedom.
Always remember: regardless of contract type, effective risk management—such as using stop-losses, managing leverage, and monitoring funding costs—is crucial for long-term profitability in volatile markets.