Kalshi, the prediction-market startup known for event-based contracts, has taken a step toward becoming a full-service financial exchange. The company told Reuters it has launched a perpetual futures contract tied to its own “US 500” stock index, a product that lets traders take leveraged long or short positions on a basket of the 500 largest US companies.
Perpetual futures, often called “perps,” are derivatives that have no expiration date. Unlike traditional futures, which require traders to roll over contracts as they near expiry, perps allow positions to stay open indefinitely. That makes them popular among traders who want to maintain exposure without the hassle of constantly replacing expiring contracts.
How the funding rate works
The key mechanism in a perpetual future is the “funding rate.” This is a periodic payment exchanged between traders on the long and short sides of the market. When the contract’s price drifts above the underlying index—often because many traders are piling into leveraged long positions—longs typically pay shorts. Conversely, when the price falls below the index, shorts pay longs. The idea is to pull the contract’s price back toward the index, keeping it roughly in line with the actual market.
Kalshi’s filing with the Commodity Futures Trading Commission (CFTC) for this type of product was reported by Reuters in August. CEO Tarek Mansour pitched the launch as a bridge from the company’s event-based markets to more traditional market exposure. The move also signals bigger ambitions: Reuters reported last month that Kalshi is preparing to seek approval for a perpetual West Texas Intermediate crude oil contract, which would put it in more direct competition with established derivatives exchanges.
What it means for investors
For everyday investors, the arrival of a perpetual future on a US 500 index is worth understanding, even if you never trade it. The product is not a passive investment like an index fund. A perpetual future doesn’t expire, but that doesn’t mean you can “set and forget” it. The funding rate is the product’s built-in financing cost, and it can add up over time.
Here’s the practical takeaway: if you hold a long position in a perp and the funding rate is positive, you’ll be paying shorts periodically. Those payments can eat into your returns, especially if you hold the position for weeks or months. Your profit or loss may depend as much on cumulative funding paid or received as on how much the index itself moved. That’s why perps are usually used for shorter-term positioning or hedging, where you’re focused on near-term moves and the ongoing funding cost is less likely to dominate the outcome.
For Kalshi, the launch is a strategic step. The company started with prediction markets—contracts on events like election outcomes or economic data releases. By moving into perpetual futures on a stock index, it’s entering territory traditionally dominated by major derivatives exchanges like CME Group. The planned crude oil contract would extend that push into commodities, a space where energy market moves can have broad ripple effects.
Investors should also note that Kalshi’s “US 500” index is its own creation, not the S&P 500. While it tracks 500 of the largest US companies, the exact composition and methodology may differ. That means the contract’s price may not perfectly mirror the S&P 500, and traders should be aware of potential tracking differences.
The broader context is that perpetual futures have become a staple in crypto markets, where they are widely used for leveraged trading. Bringing them to traditional stock indices is a relatively new development, and it reflects a growing appetite for derivatives that offer flexibility and leverage. For regulators, the CFTC’s approval of Kalshi’s product suggests a willingness to let new players into the derivatives space, though oversight remains a key consideration.
For most investors, the launch is more of a curiosity than a call to action. If you’re a long-term investor, an index fund or ETF remains a simpler, lower-cost way to get exposure to the US market. But if you’re a trader who likes the idea of leveraged bets with no expiry, Kalshi’s perp offers a new tool—just be prepared for the funding costs that come with it.
As Kalshi pushes further into traditional derivatives, it will be worth watching how regulators respond and whether other exchanges follow suit. The move could eventually blur the line between prediction markets and mainstream finance, giving investors more choices—but also more complexity.
