Spot vs perpetual futures: what is the difference?

Ownership vs synthetic exposure

A spot trade results in actually holding the asset — a token that can be sent, held, or used elsewhere. A perpetual futures position results in holding a contract whose value tracks the asset's price, without ever holding the asset itself. Both positions can gain or lose value with the market; only one of them leaves the trader holding something transferable outside the exchange or protocol that created it.

Leverage, funding and liquidation risk

Spot trading has no built-in leverage — the maximum loss is the amount paid, and there is no liquidation price because nothing was borrowed. Perpetual futures typically offer leverage, which introduces both a liquidation price (see leverage and liquidation price) and ongoing funding payments (see perpetual futures and funding) that spot positions never encounter.

Which one fits a given goal?

• Want to own the actual asset, no leverage Use spot. The trader holds the token itself; there is no funding rate and no liquidation price to track.
• Want exposure without holding the asset, plus leverage That is what perpetual futures are for — synthetic exposure, funding payments, and a liquidation price. Not offered in the GaurdWallet terminal today.
• Not sure yet Start with spot. Understand leverage and liquidation and funding before ever touching a leveraged product anywhere.

Side-by-side comparison