The problem with fixed expiry

Traditional event contracts expire on a predetermined date. If the event you are hedging against — a regulatory change, a leadership transition, a sustained macro condition — does not resolve by expiry, you must roll the position: close the expiring contract and open a new one. Each roll generates transaction costs and basis risk (the new contract may be priced differently from where the old one closed).

For risks that persist over months or years, rolling is operationally burdensome and economically costly. A key-person hedge on an executive who remains in role for three years requires twelve quarterly rolls under a fixed-expiry structure — twelve bites of transaction cost, twelve potential basis gaps.

What makes a contract perpetual

A perpetual event contract has no scheduled expiry. Instead, it is re-struck weekly to an external reference index named in the confirmation: on each re-strike date the contract is marked to that index, and the difference is paid directly between the two named parties.

If the index has moved against a party since the last re-strike, that party owes the difference to the other. The re-strike resets the contract to the current index level, so it does not drift far from the reference without requiring expiry and a new contract.

The result: a hedger can hold a position for as long as the risk exists — a year, five years, indefinitely — and settle the difference weekly, without rolling into a new contract.

How the weekly re-strike works

Tomorrow does not compute or settle a funding rate. Each perpetual confirmation names its reference index, its re-strike day and any carry or premium the two parties agree. On each weekly re-strike:

Mark to the external index. The contract is marked to the published level of the reference index named in the confirmation, not to a price Tomorrow sets.
Payment between the named parties. The party the move went against owes the difference. Tomorrow, as calculation agent, issues a payment instruction from that party to the other; the money moves directly between them. Tomorrow holds no funds and does not guarantee the payment.
Agreed carry. Any periodic premium for protection is a term the two parties negotiate in the confirmation, paid the same way.

Key-person continuity: the canonical use case

A typical institutional use of perpetual event contracts is key-person continuity coverage. A company whose value depends heavily on a specific executive — a founder-led tech company, an asset manager known for one portfolio manager's alpha — faces meaningful downside if that person leaves, is incapacitated, or dies.

A perpetual key-person continuity swap pays a notional amount if the covered person's role terminates for any covered reason. The buyer pays an agreed periodic premium (analogous to an insurance premium) for as long as the coverage is desired, by payment instruction directly to the seller. Unlike life insurance, the contract can be sized to cover equity value impairment rather than a fixed death benefit, and it can be terminated by agreement with the counterparty if the risk dissipates.

Illustrative example — not a real trade

A venture fund holds a $40M position in a founder-led AI company. The fund buys a perpetual founder-continuity swap with $10M notional and an agreed premium of 0.042% a week, paid at each weekly re-strike. If the founder leaves within 12 months (before an anticipated liquidity event), the seller owes the fund $10M, paid by payment instruction directly from the seller, and subject to the seller performing. If the founder stays, the fund has paid approximately $218K in premium over the year — equivalent to a 0.55% annual premium on the protected position.

Perpetual contracts vs. insurance

Feature	Traditional Insurance	Perpetual Event Contract
Duration	Fixed term (1–3 yr)	Indefinite — hold as long as needed
Cost structure	Annual premium	Agreed premium, paid at each weekly re-strike
Exit	Cancel the policy	Terminate or novate only with the counterparty's agreement
Payout trigger	Underwriter discretion	Objective oracle / on-chain resolution
Customization	Standard policy forms	Fully bespoke ISDA terms
Underwriting	Medical exam / review	Market-implied probability

Regulatory treatment

Perpetual event contracts structured as bilateral OTC swaps between eligible contract participants (ECPs) are regulated under Title VII of the Dodd-Frank Act. They are not subject to exchange execution requirements if neither party is a swap dealer and the notional amount does not trigger mandatory clearing thresholds. Tomorrow structures all contracts to remain within these parameters by default.