Perpetual futures are derivatives you can trade on Lighter, a decentralized perpetuals exchange (“DEX”) accessible within the Robinhood Wallet. They track the price of an underlying asset, such as a crypto asset or stock, without requiring you to buy or hold it. 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 underlying 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, Lighter will automatically trigger a liquidation to prevent debt accumulation. This can result in a total loss of your position's margin.
• Cross margin risk: Cross margin pools the margin behind all your cross positions. A profit on one can cover a loss on another, but a loss on one also weakens all the others. At high leverage, a sharp move against a single position can push every cross position toward liquidation at once. Your isolated positions would remain unaffected.
• 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 underlying 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 asset.

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 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 unerlying asset, 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 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 deployed by Lighter 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 perpetuals contract (e.g., BTC-PERP or ETH-PERP), choose your margin mode (Isolated or Cross) if you haven't already set one for that contract, choose your direction (Long or Short), set your leverage, enter your trade amount, select your order type (Limit or Market), optionally set a take-profit or stop-loss price, 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. If you have cross positions, your margin screen also shows a cross margin ratio for all of them. Learn more in Margin and liquidation below.
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 margin to your Lighter trading contract balance, not your wallet. If you have open cross positions, that USDG counts toward your cross margin right away. To move funds back to your wallet, initiate a withdrawal. Review How withdrawals work for next steps.

Order types

Lighter supports 2 order types for perpetual futures accessible through Robinhood Wallet:

• Market order: Executes immediately at the best available price on Lighter. The price you review before submitting is an estimate, and the actual fill price can differ slightly due to slippage.
• Limit order: Only executes at your specified price or better. Your order stays open until it's filled, canceled, or expires, and it may fill partially or not fill at all if the market doesn't reach your price.

If you set a limit price too close to or past the current market price, your order may execute immediately, similar to a market order.

You can also attach a take-profit price, a stop-loss price, or both when you open a position (or add them later). Lighter checks the mark price every few seconds and automatically closes your position when your price is hit.

• If you close or cancel your position, any attached take-profit or stop-loss cancels with it
• You can remove a take-profit or stop-loss at any time from Open Positions

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.

Listings and delistings

Lighter may list or delist perpetual contracts available to trade their exchange. Before a contract is delisted, we'll notify you a few days before in the Robinhood Wallet app. If a contract is delisted while you have an open position, it will automatically close it at the current mark price. Any unrealized profit or loss becomes final at that point.

Margin 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 to be used as margin for open positions.

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.

Available margin

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

Your available margin is your USDG on Lighter that isn't allocated to isolated positions, plus unrealized P&L on your cross positions, minus the initial margin your open cross positions require. Pending limit orders don't reduce it, but they do reduce how much you can use for additional limit orders.

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

   a. If you have open cross positions, you can withdraw margin backing them as long as what remains covers the initial margin they require

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. Learn more about liquidation on Lighter.

Lighter’s liquidation waterfall

• Healthy account: A Lighter account is healthy when its account value exceeds all margin requirements. It can execute any exchange operation as long as the position stays healthy after the transaction.
• Pre-liquidation: A Lighter account enters pre-liquidation mode when its account value is below the initial margin requirement but above the maintenance margin requirement. In this mode, only operations that don't decrease the account value toward the maintenance margin ratio or increase any position size can execute.
• Partial liquidation: If your account health decays past the maintenance margin threshold, the protocol automatically cancels open orders and closes your positions one by one using immediate-or-cancel limits until your margin health is restored. A liquidation fee of up to 1% goes to the Lighter Liquidity Pool (LLP) insurance fund.
• Full liquidation: If your account falls past the close-out margin threshold, the LLP insurance fund takes over all remaining positions, resulting in a total loss of your positions' deposited margin.
• Auto-deleveraging (ADL): If your account has a negative value and the LLP doesn't have enough capital to cover the losses, Lighter initiates auto-deleveraging on the bankrupt account's positions. Lighter matches these positions against accounts on the opposite side at the position's zero price, so ADL never worsens another account's health. The system selects which opposite-side accounts to match based on their leverage and unrealized P&L.

Margin and liquidation

With cross margin, all cross positions share 1 pool of margin. After sufficient losses, Lighter can liquidate all cross margin positions, not just the losing position. Because of this, your position summary shows your combined margin, combined unrealized P&L, and liquidation risk level for all your cross positions. Every cross position reflects an identical risk level.

USDG added to your portfolio is automatically added as eligible margin for cross margin positions.

When opening an isolated position, funds are drawn from the same USDG pool eligible for cross margin positions, which may raise the risk level on your cross positions.

Isolated positions work differently in liquidation. Because each isolated position has its own dedicated margin, liquidation risk depends only on that position. If an isolated position is liquidated, your other positions won’t be affected.

Checking margin

To check your margin health, select Margin available on the Perps hub.

Your margin details show your margin available, unrealized cross P&L, and cross margin ratio, which is the share of your cross margin needed to keep your cross positions from being liquidated.

The higher the ratio, the closer your cross positions are to liquidation. If it reaches 100%, Lighter can start liquidating them. When your cross positions are at risk of liquidation, you'll see a warning on the perps hub and in your margin details.

Lighter Points is a rewards program run by Lighter. When trading perpetual futures on Lighter through Robinhood Wallet, you may be eligible to earn points under this program. Robinhood Wallet does not run this program.

A portion of your points balance updates in real time as you trade, shown as a live points ticker in the app. The rest is added through scheduled weekly drops, so your total may not reflect everything you've earned right away.

For questions about how points are calculated, distributed, or converted, visit Lighter's rewards program page. Lighter alone determines what activity qualifies as eligible, how points are calculated, and when they're credited. Robinhood has no control over, and makes no representations regarding, these determinations. The program (including its existence, eligibility criteria, point values, and redemption process) is set entirely at Lighter's discretion and may be changed, limited, suspended, or discontinued at any time, for any reason, without notice.

Lighter Referrals

Lighter Referrals is a referral program run by Lighter, not Robinhood. When you invite someone to Lighter on Robinhood Chain with your referral code, you earn 10% of their Lighter points as a bonus. Nothing is deducted from their points.

For more information about eligible points, check out Lighter points.

Lighter alone sets the program's terms, including eligibility, point values, and redemption. It may change, limit, suspend, or end the program at any time without notice.

If you interact with the program, the following information will be shared with Lighter to make the program work:

• Your wallet address, to link your account to your referral code
• Referral connections, showing who referred whom
• Your onchain trading volume, used only to calculate the 10% bonus
• Your obscured wallet address and the points you've earned for a friend, shown on their referral dashboard if you joined using their link

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, or 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. Check your connection and retry the action.

Price differences and slippage

The price shown on your review screen is an estimate. Because there's a short delay before your transaction executes onchain, market orders can fill at a slightly different price, called slippage, especially in fast-moving markets. To avoid slippage, you can place a limit order instead. Limit orders only execute at your specified price or better, though they may not fill if the market doesn't reach that price.

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.

When trading perpetual futures, you can choose between isolated or cross margin modes to determine how your margin is allocated per position.

Isolated margin assigns a fixed amount of margin to a single position. Only that amount is at risk, so if the position is liquidated, losses are limited to the margin you allocated.

Cross margin shares margin across all open cross positions. Profits from one position can offset losses from another, which may help prevent liquidation. Losses can also impact all of your cross positions and lead to liquidation of all of them at once.

You choose a margin mode for each contract when opening a position, and you can use different modes across different contracts. Once you have an open position or active order in a contract, its margin mode is locked. To change it, close the position and cancel any open orders first.

Cross margin is the default when you open a new position. You can switch to isolated before placing the trade.