While bitcoin and ether traders can dabble in spot, futures, options, perpetual futures and even structured products, for traders of other altcoins, perps are perhaps the only avenue for derivatives available to them. Dated futures (those with expiry) for altcoins are illiquid, and the spot market is an afterthought for anybody who doesn't plan to hold. So, CoinDesk talked to traders who have thrived in the perpetual futures market to explain what makes perps different from other derivatives, how they help efficiently manage the needs of institutional traders and retail traders alike and what perps trading actually costs. Their answers were clear and nearly unanimous: everyone loves perps because of their deep liquidity, cheap trading fees and brutal margin efficiency, which is the amount of trading exposure you can get per unit of collateral you post. But trading fee…

Lucas Krenn, a derivatives trader at market-making firm STS Digital, and an independent trader for six years, said perps are the plumbing underneath everything the firm does. "Outside bitcoin and ether, dated futures liquidity is thin to the point of being unusable," he said. "So perps are not one tool among several. For a crypto native firm, they are the tool." Dated futures aren’t popular mainly because they have to be replaced with new contracts at expiry, and that process costs money. Those same costs are why futures-based ETFs tend to be less efficient than spot ETFs. Liquidity refers to the market's ability to absorb large buy and sell orders at stable prices. Per Krenn, standard dated futures are largely illiquid, meaning a few big orders can easily sway prices in either direction, raising slippage and spoiling execution for traders. (Slippage is the price at w…