TL;DR
Perpetual futures (perps) are derivative contracts that let you trade with leverage and go long or short on a token’s price, with no expiration date.
A perpetual future tracks the price of an underlying asset (like SOL) without requiring you to hold the asset. You deposit collateral (usually USDC or SOL), choose a direction (long or short), and select leverage (e.g., 5x). If you go 5x long on SOL and SOL rises 10%, your position gains 50%. But if SOL drops 10%, you lose 50%. If losses approach your collateral, you get liquidated and lose your deposit.
Since perps have no expiration, they use a funding rate mechanism to keep the perp price aligned with the spot price. When more traders are long, longs pay shorts a periodic funding fee (and vice versa). This incentivizes the underrepresented side and keeps the perp price from diverging too far from spot. Funding rates can be positive or negative and change frequently.
Jupiter Perps (based on a pool model), Drift Protocol (hybrid order book), and Flash Trade are popular Solana perps platforms. These offer up to 100x leverage on major pairs. Unlike centralized perps on Binance or Bybit, on-chain perps are self-custodial and transparent, but may have higher latency and wider spreads for less liquid pairs.