Definition
Futures are financial derivative contracts in which two parties agree that a specific asset will be bought or sold at a fixed price on a set date in the future. In crypto markets, the underlying asset is typically a cryptocurrency, and the contract is often settled in either the crypto itself or a stablecoin. These contracts are standardized and usually traded on organized venues such as a CEX, which defines contract size, tick size, and settlement rules. Because they are derivatives, their value is derived from the price of the underlying asset rather than representing direct ownership of it.
Crypto futures are commonly used to gain price exposure with leverage, allowing traders to control a larger notional position than their initial margin. The contract structure can be linear or inverse, and may be either dated (with a fixed expiry) or perpetual, which synthetically mimics a futures position without a fixed maturity. Trading futures introduces additional concepts such as margin, funding or settlement mechanisms, and liquidation thresholds that are specific to the derivative layer. Price execution in futures can be affected by market conditions, contributing to slippage relative to the expected entry or exit price.
Context and Usage
Within crypto trading, futures are a central instrument for directional exposure, hedging, and basis trading across centralized and, in some cases, decentralized venues. On a CEX, futures order books operate alongside spot markets, but the contracts reference an index or mark price rather than direct spot ownership. Because positions can be opened and maintained with margin, leverage is structurally embedded into most futures markets, amplifying both gains and losses on the underlying price moves. This leverage also heightens the importance of risk parameters such as maintenance margin and liquidation levels.
Operationally, futures trading interacts with other risk controls and market dynamics. Traders often associate futures with tools like a stop-loss order, which defines a price level where a position is automatically closed to limit downside within the leveraged structure. Execution quality in futures markets can be influenced by liquidity depth and order flow, which may contribute to slippage between intended and filled prices. While sandwich attack patterns are more commonly discussed in on-chain spot or swap environments, awareness of adverse execution and price impact remains relevant when assessing how futures orders are filled in volatile conditions.