Perpetual futures are derivatives you can trade on Lighter, a decentralized perpetuals exchange (“DEX”). They track the price of an underlying stock or crypto asset without requiring you to buy or hold the stock or crypto itself. Perpetual futures don’t expire. You can keep a position open as long as you maintain enough margin, but if your margin gets too low, your position will be liquidated. Restrictions and eligibility requirements apply.

Long vs. short positions

• Long: You buy a contract expecting the asset's price to go up. If the price increases, you profit; if it falls, you lose money.
• Short: You sell a contract expecting the asset's price to go down. If the price decreases, you profit; if it rises, you lose money.

How leverage works

Leverage lets you hold a larger position with less margin and determines your margin rate, but there are risks associated with using leverage. Leverage levels may differ for certain assets.

• Magnified losses: Because leverage multiplies your exposure, even small market fluctuations can lead to significant losses relative to your deposited margin. An adverse price movement of just 20% at 5x leverage can eliminate your position's margin entirely.
• Liquidation risk: If your collateral falls below required maintenance thresholds due to market losses, the underlying decentralized protocol will automatically trigger a liquidation to prevent debt accumulation. This can result in a total loss of your position's margin.
• Funding rates: Perps utilize a funding rate, which is a periodic fee exchanged directly between long and short traders every hour to keep the contract price closely aligned with the spot price of the asset. Depending on market conditions, you may systematically owe or receive funding payments while holding an open position.

Because perpetual contracts don’t have an expiration date, they require a balancing mechanism, called a funding rate, to ensure the price of the contract stays closely aligned with the actual market price (spot price) of the underlying crypto.

Hourly funding intervals

On the Lighter protocol, funding payments occur automatically every hour. A countdown timer on the contract detail page will show you exactly how many minutes remain until the next hourly interval settles. Learn more about funding rates on Lighter.

Who pays whom?

Funding rates fluctuate continuously based on market dynamics. Robinhood does not set these rates, collect these fees, or monetize funding in any way. Payments flow completely peer-to-peer between long and short traders:

• Positive funding rate: If the perp contract is trading higher than the spot price of the underlying crypto asset, the funding rate goes positive. In this scenario, long traders pay short traders.
• Negative funding rate: If the perp contract is trading lower than the spot price of the cryptocurrency, the funding rate goes negative. In this scenario, short traders pay long traders.

Funding payments are automatically debited from or credited to your position's margin balance at the exact turn of the hour. If you don’t want to participate in a specific funding event, you must fully close your open position before the hourly countdown timer reaches zero. In extreme market conditions, persistent negative funding rates can erode your isolated margin, which increases your overall liquidation risk.

Robinhood Wallet acts purely as a technology provider. All transactions are non-custodial, meaning your funds are managed onchain via decentralized smart contracts rather than a centralized exchange ledger.

1. Deposit: You deposit USDG margin from your available wallet balance into a Lighter trading smart contract on the Robinhood Chain.
2. Trade: You select a crypto perpetuals contract (e.g., BTCUSDG or ETHUSDG), choose your direction (Long or Short), set your leverage, enter your trade amount, and sign a transaction within your wallet to open a position on Lighter.
3. Monitor: Once your position is open, you can view your real-time, streaming unrealized profit and loss (P&L), liquidation price estimates, and market charts natively from the contract detail page or your wallet home tab.
4. Close: When you’re ready to exit, select Close Position. Your final P&L settles onchain, fees are deducted, and your remaining margin is available in your trading contract balance, ready to be withdrawn back to your self-custody wallet.
5. Withdrawal: Closing a position returns your collateral to your trading contract balance (it doesn't automatically move funds back to your main wallet). To deposit funds back to your wallet balance on Robinhood Chain, you must initiate a withdrawal. Review How withdrawals work for next steps.

On-device transaction signing explained

Because your Lighter account is completely non-custodial, every action you take requires your explicit permission. Robinhood cannot access your keys or execute actions for you. Every time you deposit, open a trade, close a trade, or request a withdrawal, you must securely confirm and cryptographically sign the transaction within your wallet directly on your device via the app's secure signing interface.

Collateral and smart contracts

When you deposit funds to trade perpetual futures on Lighter, your USDG tokens are moved on the Robinhood Chain from your wallet and locked into the Lighter Relayer Smart Contract.

While the funds sit in this audited onchain contract, the Lighter protocol credits your trading interface with an equivalent margin balance so you can place trades.

Where to find your funds

You can view your available margin, used margin at any time directly from the main perps hub landing page inside the app.

To deposit your funds back into your wallet balance on Robinhood Chain, you must initiate a withdrawal from the perps hub.

1. Specify the amount of USDG you wish to withdraw (limited to your available collateral minus any margin currently backing open positions)
2. Select Withdraw → Confirm

The Lighter protocol releases your credited balance and the smart contract returns the USDG to your wallet address on the Robinhood Chain.

How liquidation works

When you trade perpetual futures on Lighter, your margin (USDG) supports your open positions. Liquidation is the automatic process of closing your position when your losses have reduced your collateral below the level needed to safely keep it open.

Liquidation is an automated risk management safety net executed strictly by Lighter's onchain engine. Robinhood can’t intervene in, alter, or reverse any liquidation event. To Learn more about liquidation on Lighter.

Lighter’s liquidation waterfall

1. Healthy account: A Lighter account is considered healthy when its account value is greater than all the margin requirements. It can execute any type of exchange operation as long as its position remains healthy after the execution of the transaction.
2. Pre-liquidation: A Lighter account is in pre-liquidation mode when its account value is below the initial margin requirements but above the maintenance margin requirements. In pre-liquidation mode, only exchange operations that don’t decrease the account value to the maintenance margin requirement ratio and don’t increase the size of any position can be executed.
3. Partial liquidation: If your Lighter account health continues to decay past the maintenance margin threshold, the protocol steps in. It automatically cancels any open orders and begins closing your positions one-by-one using immediate-or-cancel limits until your margin health is restored. A liquidation fee of up to 1% is charged by the protocol and sent to the Lighter Liquidity Pool (LLP) insurance fund.
4. Full liquidation: If your account falls past the close-out margin threshold, the Lighter Liquidity Pool insurance fund takes over all remaining positions, resulting in a total loss of your position's deposited margin.
5. Auto-deleveraging (ADL): When your Lighter account has a negative value and the LLP doesn’t have enough capital to cover the losses of the bankrupt account, the exchange initiates auto-deleveraging for the bankrupt account’s positions. A bankrupt account, by definition, has at least one open position. The exchange identifies positions on the opposite side of the bankrupt positions and executes trades between these accounts if their zero prices align. This ensures that ADL doesn’t decrease the health of any account, as the execution price can’t be worse than the zero price of the position. When selecting positions for ADL on the opposite side, the system ranks users based on their leverage and unrealized P&L.

Isolated margin and liquidation

When you access the Lighter DEx through Robinhood Wallet, you may only open perpetuals positions using isolated margin. This means each position has its own separate margin account and losses on one position don’t affect another. If one position is liquidated, your other positions and your available USDG balance remain unaffected.

Absence of take-profit and stop-loss orders

The product only supports market orders. Automated risk-management safety orders, such as take-profit or stop-loss, are not available.

Because you cannot set automated price levels to protect your trades while you are offline, you must manually monitor your open positions closely to protect yourself from rapid adverse market moves and sudden liquidations.

Failed or pending transactions

• Pending for a long time: Transactions may occasionally experience temporary network delivery delays. The app will show a pending state on your wallet home screen. Do not attempt to re-submit the same trade while it is processing.
• Failed transaction signing: If your device loses network connectivity, experiences an internal wallet error, your transaction will fail. Robinhood Wallet handles this safely: no duplicate or unexpected orders are placed, and no funds are lost. Simply check your connection and retry the action.

Price differences and slippage

Because there is a slight delay between when you view an order review screen and when your transaction is submitted and executed onchain, the final market price can fluctuate. The prices displayed on your review screen are estimates. If the asset's price moves sharply during submission, market makers execute your order against the real-time order book, which may result in a slightly different final fill price due to market slippage.

Protocol outages

If the Lighter API or matching engine experiences an outage, a backend circuit breaker activates inside Robinhood Wallet. The interface will switch to an exchange unavailable state. During a protocol outage, you’ll be temporarily unable to trade, close active positions, or see your accumulated trading rewards points until the decentralized systems recover.