The perpetual’s price is set the ordinary way — buyers and sellers on its own book. Nothing mechanically ties it to spot in the moment.
What ties it over time is funding: a recurring payment that makes the crowded side pay rent. It is an incentive, not a constraint, so it works by persuasion and works slowly.
The tether is loose on purpose
Because funding settles only at intervals and is capped, the perpetual can trade meaningfully away from its index for as long as somebody is willing to pay for the privilege.
That gap is the basis, and its persistence is the informative part. A gap that closes immediately says arbitrage capital is present and cheap. One that persists says capital cannot get there — which is a statement about the venue, not about the asset.
What actually closes it
Traders taking the paid side, and cash-and-carry desks holding spot against a short perpetual. Both need capital on the venue and both accept its counterparty risk, which is why the closing force is finite rather than instant.
Where it breaks down
In a violent move. Funding cannot reprice fast enough, arbitrageurs widen or withdraw, and the perpetual detaches from the index by more than usual — at the same moment book depth thins.
This is why the mark for margin purposes is taken from the index rather than from this book: valuing positions on a detached price would liquidate accounts on a dislocation the wider market did not share, which is the reasoning in mark price versus last price.
The read
Watch the perpetual against its index rather than in isolation. Trading rich is leveraged demand paying up; trading cheap is the reverse. And a gap that will not close is telling you something about the plumbing rather than the price.