Stock Perpetual: What It Is and How It Works

How a stock perpetual works

A stock perpetual works like any crypto perpetual futures contract, but the reference price is a stock instead of a coin:

1. Reference price. An oracle or index feeds the market the underlying share price, for example Tesla's, while its stock exchange is open.
2. Margin and leverage. Traders post collateral, usually a stablecoin, and open long or short positions larger than their margin. Profit and loss are settled in that collateral; no shares change hands.
3. Funding. Periodic funding payments between longs and shorts push the contract's price toward the reference price.
4. Liquidation. If losses eat the margin down to the maintenance level, the position is liquidated.

The key difference from coin perps is market hours. Crypto venues run 24/7, but stock exchanges close at night, at weekends and on holidays. During those hours there is no fresh share price, so the contract trades on its own supply and demand, and the oracle design decides how its price is anchored until the market reopens. Large gaps can appear at the next open.

Some on-chain venues let third parties deploy their own perp markets with their own oracle prices, so the quality of a market's price depends on the oracle design its deployer chose.

Stock perpetual vs share vs tokenized stock

Risks of stock perpetuals

• Leverage and liquidation: small moves in the stock can wipe out a leveraged position.
• Off-hours gaps: prices set while the stock market is closed can jump when it reopens, triggering liquidations.
• Oracle risk: a wrong or manipulated reference price affects every position.
• Funding costs on the crowded side of the market.
• Regulation: equity derivatives are tightly regulated in many countries, and these products are often unavailable to retail users in some jurisdictions.

This is general information, not a recommendation to trade any instrument.