What Are ‘Perps’ and Why Are Prediction Markets Racing to Offer Them in the U.S.?
Kalshi and Polymarket announced perpetual futures products on the same day, racing to bring a product category that has dominated offshore crypto derivatives markets into the U.S. regulatory framework.
On April 13, Kalshi CEO Tarek Mansour posted a cryptic teaser video to X with a single word: “Timeless.” A countdown timer pointed to an April 27 launch event in New York.
The industry spent the following week speculating. Then, on April 21, Bloomberg confirmed what the rumor mill had been saying: Kalshi is launching perpetual futures on crypto assets. Within hours, Polymarket announced it was doing the same thing.
Polymarket’s promotional video showed a sleek trading interface with leverage selectors ranging from 7x to 10x, offering positions on cryptocurrencies, precious metals, and equities like Nvidia, available around the clock. Two of the largest prediction market platforms in the world had pivoted on the same day into a product category that has generated hundreds of billions of dollars in offshore monthly volume.
The question for anyone watching the American gambling and financial services landscape is the same: what exactly is a perp, and why does it matter?
What a Perpetual Future Actually Is
A standard futures contract is straightforward. Two parties agree today on a price for something to be delivered or settled at a specific future date. A farmer locks in the price of a wheat crop before harvest. An airline hedges jet fuel costs for the coming quarter. When the expiration date arrives, the contract settles, and everyone moves on.
Perpetual futures work differently. Instead of having a fixed expiration date, they stay open indefinitely. Traders can hold a leveraged position for as long as they choose, provided they maintain enough collateral to support it. Rather than a single settlement at expiration, there is a continuous fractional settlement process between the long and short sides of the trade, governed by a funding rate.
If more traders are long than short, longs pay a small periodic fee to shorts, and vice versa. That mechanism keeps the perpetual contract’s price anchored to the underlying asset without requiring anyone to close and reopen their position when a contract expires.
Funding fees for these contracts are expected to be capped at around 11% APR, with settlement windows ranging from 5 minutes to 8 hours. The leverage on offer, up to 10x on Polymarket’s announced product, means a 1% move in the underlying asset produces a 10% gain or loss on the trader’s collateral. A 10% adverse move at 10x leverage wipes the position out entirely.
That combination of no expiration, continuous settlement, and high leverage is precisely what made perps enormously popular in offshore crypto markets. They became a workaround to traditional finance limitations in the crypto industry’s early years, and they have since grown into the dominant trading instrument in crypto derivatives globally, with platforms like Hyperliquid processing hundreds of billions in monthly volume entirely outside the U.S. regulatory framework.
Why They Have Been Offshore Until Now
The reason American traders have not had easy access to perpetual futures is not a lack of demand. It is a regulatory gap that has existed since the advent of perps.
Standard futures contracts fall cleanly under the CFTC’s jurisdiction. Perpetual futures are structurally different enough that their regulatory classification has never been formally settled in the United States. Without a clear legal pathway, exchanges operating under U.S. licenses have stayed away, and volume has flowed to offshore venues where the rules are either absent or considerably more permissive.
That gap did not go unnoticed in Washington. In their September 2025 joint statement, SEC Chairman Paul Atkins and CFTC Acting Chairman Caroline Pham identified perpetual contracts as a priority area for regulatory harmonization, noting that jurisdictional and definitional constraints had limited their use in the U.S. and that the agencies could consider concurrent steps to onshore perpetual contracts that meet investor and customer protection standards.
That regulatory green light, or at least regulatory green-ish light, is what unlocked the current moment. CFTC Chairman Michael Selig said last month that the agency plans to formally authorize perpetuals in the U.S., which would accelerate the product’s mainstream availability. Kalshi, which holds multiple CFTC licenses and secured approval for margin trading in March, has a clear regulatory pathway. Polymarket’s situation is more complicated: it received CFTC approval to operate as a Designated Contract Market through its Polymarket U.S. entity, but its announced product is launching on its international platform first, and the regulatory status for U.S. users remains unsettled.
The Competitive Logic
Both platforms are raising significant capital alongside these product launches. Kalshi was finalizing a $1 billion raise at a $22 billion valuation as of this week, while Polymarket is in talks to raise $400 million at a $15 billion valuation. That capital context matters for understanding why both companies moved on the same day. This is not a coincidence. It is a race.
The platforms that pioneered prediction markets in the U.S. now face competition from every direction. Robinhood, Coinbase, and Kraken have all added prediction market functionality in the past year. Coinbase spent $2.9 billion to acquire Deribit, the leading crypto derivatives exchange, which gave it access to a large perps infrastructure but has not yet launched true open-ended perpetuals domestically. By moving into perps now, Kalshi and Polymarket are not just expanding their product suite. They are pre-empting the competitive threat from crypto-native platforms moving in the opposite direction.
The timing is also driven by a platform-level problem that perpetuals solve elegantly. Binary prediction market contracts tie up collateral until an event resolves. A contract on whether the Fed will raise rates in June sits dormant until June. Perpetual futures convert that idle collateral into yield-generating activity, allowing platforms to keep user funds working continuously rather than sitting in position until an outcome is determined. That is a meaningful improvement in capital efficiency for both the platform and the trader.
What It Means for the Prediction Markets Industry
Perps represent a significant expansion of what prediction markets are. A binary event contract asks a yes-or-no question with a defined resolution date. A perpetual future is open-ended, leveraged, and settles continuously. The two products attract different trading behaviors and different types of risk.
Critics who have argued that prediction markets already skew too far toward speculation rather than genuine hedging will find the leveraged perp offering a difficult product to defend on information-efficiency grounds. A trader holding a 10x leveraged Bitcoin perpetual on Kalshi is not hedging against economic uncertainty. They are making a highly leveraged directional bet. That is a legitimate financial activity, but it is some distance from the original justification for event contracts as instruments for aggregating dispersed information about real-world outcomes.
The regulatory questions around prediction markets that have never been fully resolved, as the CFTC and SEC acknowledged when they solicited 40 questions’ worth of public comment in March, become considerably more complex when leverage and continuous settlement are added to the mix.
The agencies said they wanted help figuring out how to regulate prediction markets. Kalshi and Polymarket have now given them something harder to classify than a binary contract with a resolution date.
The offshore perps market runs hundreds of billions of dollars in monthly volume with minimal friction and no CFTC oversight. If onshoring even a fraction of that activity under a regulated framework is achievable, the prize is enormous. Whether the regulatory framework catches up fast enough to make that onshoring orderly, rather than chaotic, is the question neither agency has answered yet.
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