Perpetual futures don't require any margin. All it requires is matching buy side and sell side market participants and transferring money between their accounts as the underlying changes in value. The exchanges don't actually hold any underlying with perps, so there's no need to borrow money.

How does a perpetual future actually work?? What happens if 5 people buy the "sell" side and 1 person buys the "buy"? There's no way to redeem to the underlying, and I don't think the 1 person pays out 5x the price movement to the other side.

An exchange can hedge vs excess buy orders by buying the underlying, but how do they hedge vs excess sells?

I've been trying to figure out how to short BNB, and perps feel pretty much as risky as trying to do it on binance itself.

Each trade is bilateral. Futures, both regular and these "perpetual swaps" are zero-sum. A person buying is another person selling and vice versa. The exchange does not need to hedge the underlying because the exchange/clearing house is a neutral party in the transaction as long as the individual traders are solvent. What it is exposed to is traders blowing up and not being to cover their debts.

In case of regular futures, price discovery is aided by the fact that the futures eventually settle to either the underlying or its cash value at a specific point. In perpetual futures, price discovery is aided by "funding fees," which are periodic cash transfers from the side that is contributing to the price discrepancy between the future and the spot to the opposite side. E.g., if perp is below the spot, the short holders will periodically be charged the funding fee, which will go to the long holders, to encourage the shorts to buy/get the price closer to spot, etc.

If five person buys and one person sells, only one person actually has the buy order executed. The other four are just waiting in line.

Counterparty risk of exchanges blowing up is exactly why tether doesn’t have a gigantic short volume outstanding. Shorting stablecoins or coins that represent profit share of exchanges like bnb is incredibly risky and that’s largely on purpose, the ecosystem doesn’t want people shorting it.

Hence the "without your permission" caveat. Point being, when you lend your assets to brokerage, it's explicit, unlike a fractional reserve bank, where deposits are inherently lent out (and no need to comment that fractional reserve banking doesn't "really" work this way, I get it, but deposits are still part of the capitalization of the bank).

To be fair, it would be better if you explicitly lent money via certificate of deposits to the banks because it means their job is much less risky. The fractional reserve banking model isn't really something to imitate, it is a rather ugly hack that we cannot do without when people don't get enough CDs.

In theory, the exchanges should lend their own money to margin traders.