Binance Perpetual vs. Delivery Futures: Key Differences and Which One to Choose
Perpetuals have no expiry date, whereas Delivery futures have fixed settlement dates. While they look similar, their risk structures and cost models vary. This guide explores holding costs and optimal hedging strategies.
On Binance, "Perpetual" and "Delivery" (Quarterly) futures are two distinct products. To begin, activate your futures account on the Binance Official Website and download the Binance Official APP (for iOS, see the iOS Installation Tutorial).
The Key Difference in a Nutshell
- Perpetual: No expiry date. It uses "Funding Rates" to keep its price anchored to the spot market price.
- Delivery: Has a fixed expiry date (Quarterly, Bi-Quarterly, etc.). It undergoes mandatory settlement upon expiry.
Side-by-Side Comparison
| Dimension | Perpetual Futures | Delivery Futures |
|---|---|---|
| Expiry | None | Current/Next Quarter/Yearly |
| Holding Cost | Funding Rates | Premium/Discount (Basis) |
| Price | Closely follows spot | Influenced by futures curve |
| Liquidity | Extremely High | High only for major coins |
| Best Use Case | Short-term / Trend | Long-term / Hedging |
Perpetual Futures
This is the most popular instrument, used by 90% of retail traders.
Characteristics:
- Open or close positions at any time, 24/7.
- Funding rates are paid/received every 8 hours.
- Price tightly tracks the "Index Price" (spot market).
Risks:
- Holding costs (funding) can accumulate over long periods.
- High funding rates during extreme multi-long or multi-short imbalances.
- High sensitivity to sudden spot market volatility.
Delivery (Quarterly) Futures
These are forward contracts that settle quarterly. Binance offers:
- Current Quarter: Settles at the end of the current quarter.
- Next Quarter: Settles at the end of the following quarter.
- Available in both USD-M and COIN-M versions.
Characteristics:
- Automatically settles at the spot price upon expiry.
- No funding rates.
- A "Premium" or "Discount" exists between the futures price and the spot price.
Best For:
- Long-term Hedging: Asset holders use quarterly contracts to hedge against downside risk without paying funding fees.
- Arbitrage: Exploiting price differences between Perpetual and Delivery contracts.
- Directional Trades: For those who want to avoid being "eaten" by funding fees during a long holding period.
How Funding Rates Work
Perpetual contracts settle funding every 8 hours (00:00, 08:00, 16:00 UTC).
- When the rate is positive, Longs pay Shorts.
- When the rate is negative, Shorts pay Longs.
In a healthy market, the rate is usually around ±0.01%, but it can spike to ±0.5% during extreme market mania or panic.
Premiums and Discounts in Delivery Futures
The price of a delivery contract = Spot Price + Basis (Premium/Discount).
- Contango (Premium): Market is bullish; Future Price > Spot Price.
- Backwardation (Discount): Market is bearish; Future Price < Spot Price.
The larger the premium, the more aggressive the market's bullish sentiment.
Selection Guide: Which One to Choose?
| Goal | Recommended Product |
|---|---|
| Intraday / Scalping | Perpetual |
| Overnight Trend Trading | Perpetual |
| 1-3 Month Hedging | Current Quarter Delivery |
| 3-6 Month Hedging | Next Quarter Delivery |
| Arbitrage | Perpetual + Delivery Combo |
| Farming Funding Fees | Perpetual (when rates are high) |
Holding Cost Comparison (Example)
Holding Perpetual for 30 Days
Assume an average funding rate of 0.01% every 8 hours (0.03%/day). 30 Days ≈ 0.9% - 1.0% cost (for the direction paying the fee).
Holding Delivery for 30 Days
Assume a 1% Premium at entry. As the settlement date nears, the premium decays to zero. This results in a 1% cost over 30 days.
While theoretically similar, market conditions can cause one to be significantly cheaper than the other.
Main Trading Pairs
| Asset | Perpetual | Delivery |
|---|---|---|
| BTCUSDT | ✓ | ✓ |
| ETHUSDT | ✓ | ✓ |
| BNBUSDT | ✓ | ✓ |
| SOLUSDT | ✓ | Current Quarter Only |
| Other Altcoins | ✓ | Limited to Top Assets |
Delivery contracts are primarily active for mainstream coins. Most altcoins only have Perpetual markets.
USD-M vs. COIN-M
Both contract types offer two margin options:
| Type | Margin Used | PnL Denomination |
|---|---|---|
| USD-M | USDT | Settled in USDT |
| COIN-M | The Coin itself (BTC/ETH) | Settled in the Coin |
COIN-M is excellent for long-term holders as profits increase your actual coin holdings. However, your principal value drops if the coin's USD price falls.
Cross-Contract Arbitrage (Basis Arbitrage)
A professional strategy used between Perpetual and Delivery markets:
- If the Current Quarter is at a 2% premium over the Perpetual price.
- A trader "Longs Perpetual" and "Shorts Delivery" simultaneously.
- Upon the delivery date, the 2% basis automatically converges to zero, locking in a 2% profit regardless of market direction (minus fees).
Switching Between Products
You can switch between these instruments at the top of the trading panel. However, margin is not automatically shared:
- USD-M Perpetual Account
- USD-M Delivery Account
- COIN-M Account These are separate. You must manually "Transfer" funds between them.
FAQ
Q: Do Delivery contracts close automatically? A: Yes. At the settlement time, the system closes the position at the settlement price. No manual action is required.
Q: Which has lower fees? A: The base fee structure is identical. VIP levels and BNB discounts apply to both.
Q: Can I extend a Delivery contract? A: No. Once it settles, it is gone. You must open a new position in the next available contract (this is called "rolling over").
Q: What if funding rates are too high? A: If you are in a long-term position, consider switching to a Delivery contract to bypass the daily funding costs.
Q: Can I hedge across both? A: Yes, many traders use Perpetual for directional plays while using Delivery for long-term hedging.
Extended Reading
Beginners should start with Perpetuals. Once you master funding rates and liquidation mechanics, you can explore Delivery contracts for more complex hedging and arbitrage strategies.