What Is the Difference Between Perpetual and Delivery Futures Contracts
When first exploring futures trading on Binance, many users find themselves confused by the two main types available: perpetual contracts and delivery contracts. What exactly are the differences, and which one is better suited to your needs? You can experience both types on the Binance official website futures trading page, or through the Binance official app. iPhone users can refer to the iOS installation guide to install the app first.
Understanding Perpetual Contracts
The defining characteristic of a perpetual contract is that it has no expiration date. Once you open a position, you can theoretically hold it indefinitely — as long as you are not liquidated and you do not choose to close the position yourself.
This is fundamentally different from traditional futures contracts, which must be settled on a designated delivery date. Perpetual contracts have no such constraint, making them function more like leveraged spot trading.
Perpetual contracts use a "funding rate" mechanism to keep the contract price closely aligned with the spot price. Every eight hours, a funding rate is settled, with payments exchanged between long and short position holders. This mechanism prevents the perpetual contract price from diverging too far from the underlying spot price.
Understanding Delivery Contracts
Delivery contracts (also called quarterly futures) have a defined expiration date. Binance offers delivery contracts that typically come in two variants: current quarter and next quarter contracts, expiring at the end of the respective quarter.
When the contract expires, it is automatically settled. If you still have an open position at that time, the system closes it at the settlement price. You do not need to take any manual action, but if you prefer not to be automatically settled, you must remember to close your position before expiration.
Delivery contracts do not have funding rates — this is one of the most significant differences from perpetual contracts.
Side-by-Side Comparison of Key Differences
| Feature | Perpetual Contract | Delivery Contract |
|---|---|---|
| Expiration date | None | Yes (end of quarter) |
| Funding rate | Yes (every 8 hours) | None |
| Price anchoring | Tracks spot via funding rate | May trade at premium or discount |
| Trading volume | Very high, excellent liquidity | Relatively lower |
| Best for | Short-term trading | Medium to long-term positions |
| Fees | Maker 0.02% / Taker 0.05% | Maker 0.01% / Taker 0.05% |
Advantages and Use Cases for Perpetual Contracts
Superior liquidity: Perpetual contracts are the highest-volume futures product on Binance. The tight bid-ask spread means even large orders can be executed with minimal slippage.
Maximum flexibility: With no expiration date to worry about, you can open and close positions at will. This makes perpetuals ideal for day trading and short-term strategies.
Wide token selection: Binance offers perpetual contracts for a vast range of trading pairs, from majors like BTC and ETH to a wide variety of altcoins. Delivery contracts, by contrast, support far fewer tokens.
Best suited for: day traders, short-term traders, and anyone who values having a broad selection of tradable assets.
Advantages and Use Cases for Delivery Contracts
No funding rate costs: This is the most compelling advantage of delivery contracts. If you plan to hold a position for days or even weeks, the cumulative funding rate costs on a perpetual contract can become substantial. Delivery contracts eliminate this expense entirely.
Lower maker fees: The maker fee for delivery contracts is just 0.01%, which is half the 0.02% charged on perpetual contracts. For high-frequency limit order traders, this difference adds up.
Ideal for hedging: Many miners and long-term holders use delivery contracts to hedge their spot exposure. For example, if you hold BTC but are concerned about a short-term price decline, you can open a short position on a delivery contract to offset the risk.
Best suited for: medium to long-term traders, hedgers, and traders who are sensitive to funding rate costs.
Price Differences: Contango and Backwardation
Perpetual contract prices typically stay very close to the spot price because the funding rate mechanism actively corrects deviations. Delivery contract prices, however, often diverge from the spot price:
- Contango: When the delivery contract price is higher than the spot price, it signals that the market has a broadly bullish outlook.
- Backwardation: When the delivery contract price is lower than the spot price, it indicates a broadly bearish market sentiment.
As the expiration date approaches, this price difference gradually converges, ultimately reaching parity at settlement.
Experienced traders exploit this price differential through arbitrage strategies. For example, simultaneously buying spot and shorting the delivery contract to capture the premium as it converges. This type of strategy carries relatively low risk but requires meaningful capital to generate worthwhile returns.
Which Should Beginners Choose
If you are new to futures trading, perpetual contracts are the recommended starting point. Here is why:
- Perpetual contracts have higher trading volume and better liquidity, which means better execution prices.
- You do not have to worry about forced settlement at expiration.
- More educational content and tutorials are available for perpetual contracts, making it easier to find help when you need it.
- Most retail traders focus on short-term positions that do not require long holding periods.
Once you are comfortable with futures trading mechanics, you can then evaluate whether delivery contracts better suit your specific needs.
Can You Use Both Simultaneously
Absolutely. Binance's perpetual and delivery contract markets are separate, and you can hold positions in both at the same time. Some traders use perpetual contracts for short-term trades while maintaining medium to long-term positions on delivery contracts.
One important note: the margin for each type is calculated independently. You need to deposit margin into each contract account separately — the balances are not shared between them.
Safety Reminders
Regardless of which contract type you choose, risk management must always be your top priority. It is recommended to enable all security settings on the Binance official website to protect your funds. Using the Binance official app allows you to monitor your positions and market conditions at any time, ensuring you never miss critical market movements. Futures trading carries extremely high risk — always trade only with money you can afford to lose.
Summary
Perpetual contracts are best for short-term trading, offering excellent liquidity and a wide selection of tokens, but they come with funding rate costs. Delivery contracts are better suited for medium to long-term positions, with no funding rates and lower maker fees, but they have less liquidity. Each type has its strengths and weaknesses — choose based on your trading style and intended holding period.