Shorting a perpetual means opening a position that profits when price falls, without borrowing the underlying asset first. The mechanism is a collateralized contract, which removes the borrow fee, the locate requirement and the buy-in risk that come with shorting on spot markets. What's left is a directional bet with its own set of mechanics: collateral, leverage, funding and a liquidation price on the upside instead of the downside.
Short selling a stock on spot markets means borrowing shares from a broker, selling them immediately, and buying them back later to return to the lender. That structure requires shares to be available to borrow, and it carries the risk of a forced buy-in if the lender recalls them. A perpetual short skips all of that: there's nothing to borrow. The trader posts collateral, opens a short position, and the exchange's margin engine tracks the position's value against the index price in real time. The economic exposure is the same, price falls, the position gains, price rises, the position loses, but the plumbing underneath is different.
Funding on a perpetual flows between longs and shorts. When the perpetual trades above the index price, longs pay shorts; when it trades below, shorts pay longs. A short position opened during a period of strongly positive funding, common when a market is broadly bullish and long-heavy, earns that payment every settlement, which can offset part of the cost of being wrong on direction. The reverse is also true: a crowded short market often shows negative funding, meaning shorts pay to stay short, an ongoing cost on top of the trade thesis itself.
Opening and closing a short costs the same 0.14% round-trip fee as any perpetual position, 0.07% on entry and 0.07% on exit, regardless of direction. There's no separate short-selling fee or borrow rate layered on top, because there's nothing being borrowed. The only ongoing cost while the position is open is funding, which settles hourly and can run positive or negative depending on how the market is positioned.
A short's loss is not capped the way a long's downside is naturally limited by price reaching zero. A long position's maximum loss is the collateral posted; a short position facing a sharp, sustained rally can face liquidation well before any natural ceiling on the price move. This asymmetry is the core risk to manage: liquidation on a short happens above the entry price, and the distance to that liquidation price shrinks as leverage increases. A sudden move driven by a short squeeze, where forced buybacks from other liquidated shorts add fuel to the rally, can close out a short faster than the underlying thesis had time to play out.
A worked comparison shows why the direction matters for how the position is managed. A $5,000 notional short opened at 5x leverage on an asset trading at $100 has roughly $1,000 in margin behind it. A 15% adverse move, to $115, produces a $750 loss against that margin, well before the position is wiped out, but a large step in that direction. The same 15% move on a 10x short, with only $500 in margin behind the identical $5,000 notional, consumes the entire margin and triggers liquidation. Leverage doesn't change the dollar loss from a given price move; it changes how much margin is available to absorb it before the position is closed involuntarily.
A short can be closed at any time by taking the opposite action, buying back the notional amount, which realizes the P&L and stops further funding accrual. Reducing leverage after opening a position widens the distance to liquidation, at the cost of tying up more collateral. A stop set above entry, at a level that leaves room for normal volatility but well below the calculated liquidation price, gives the trader control over the exit instead of leaving it to the venue's margin engine.
A short can also be closed partially, reducing size without exiting entirely, which is a useful middle ground when the original thesis still holds but the position has grown larger relative to the account than intended, whether through adding to it or through the account's total collateral shrinking after other trades. Partial closes reduce notional exposure and move the effective liquidation price further away, without requiring a full exit and later re-entry, which would mean paying the round-trip fee twice.
You post collateral in a supported stablecoin, choose a leverage level within that market's cap, and size the position by notional value. Once opened, the position accrues funding every hour and carries a liquidation price set above the entry price.
Spot short selling requires borrowing shares or coins first, which involves a borrow fee and locate risk. A perpetual short needs no borrowed asset at all, it is a collateralized contract whose value moves opposite to price, so the only ongoing costs are funding and the standard round-trip trading fee.
Going short means opening a position that gains value when price falls and loses value when price rises, the mirror image of a long position. On a perpetual, this is done directly through the contract.
Perpetual markets for stocks, gold, indices and pre-IPO names — settled on-chain, no wallet-to-exchange transfers.
