Hello. We continue the cycle of educational articles
This time we will tell you in detail about funding and how to make money on it.
Funding or funding rate is a cryptocurrency futures mechanic that reallocates parts of positions between bidders.
It was created to level the price difference with the spot market.
Calculated based on price differences
If the price of the underlying asset is lower than the price of the futures, the longs pay the shorts. If not, vice versa. Consequently, the greater the deviation of the futures, the greater the funding.
The funding rate works on the P2P principle – transfers are made exclusively between trading participants. The exchange does not charge a commission for funding.
In theory, looking at history, you can make money at the funding rate.
The fundraising mechanic is triggered every 8 hours (three times a day) and is calculated relative to the volume of your open position. Each asset has its funding rate.
Going short, on average, you will be paid 13% / year in USD in fundraising
It turns out such a bank deposit =)
Our platform can collect information about funding, etc. So that if something happens, you can always see how much you have earned or lost from it.
But I have to warn you – even if you pay for the funding, you can get enough of it just by trading with the trend. Often this strategy is much more effective, and see the portfolio for an example https://mytrades.link/user/OneBurned
Statistically, most of the time funding is paid in shorts.
Based on this, by opening x1 short bitcoin on Binance Coin-m futures, you will receive ~ 13% per annum in dollars.
At Bitmex, the situation is identical.