Crypto Perpetual Futures Glossary: Funding, OI, Premium and Liquidation

Crypto derivatives have their own vocabulary. Understanding the basic terms makes it easier to read funding dashboards and avoid common mistakes.

Funding rate

A recurring payment between long and short traders designed to keep perpetual futures close to spot prices.

Open interest

The total amount of active futures contracts that have not been closed. Rising open interest can show new leverage entering the market.

Premium

The difference between the perpetual contract price and the underlying spot or index price. Premium often influences funding.

Liquidation

Forced closure of a leveraged position when margin falls below required levels.

Long/short ratio

A measure of how accounts or volume are distributed between long and short exposure. It should be interpreted carefully because large traders and small accounts can differ.

Carry trade

A strategy attempting to earn funding while hedging directional risk, often by combining spot and perpetual positions.