Crypto markets today

New types of contract

  • Hedging and risk management: this was the main reason why futures were invented.
  • Short exposure: traders can bet against an asset’s performance even if they don’t have it.
  • Leverage: traders can enter positions that are larger than their account balance.

What are funding rates?

The opportunity


  • High returns (especially compared to the limited level of risk involved)
  • Zero directional risk (unlike directional strategies)
  • No impermanent loss (unlike traditional yield farming)
  • Light-touch management (no need for frequent hedging)
  • Diversified exposure (using trusted CEX & DEX platforms)
  • Longer-lasting returns (not having to jump into a new pool every 24h)

Why isn’t everybody doing this?

  • Opacity: There is a lack of awareness around non-directional (a.k.a. “delta neutral”) strategies like this. Large players use strategies like this as the bedrock of their returns, but alpha isn’t normally shared with new entrants
  • Perceived complexity: whilst the concepts these strategies use are easy to understand, they’re not as simple as ‘buy low sell high’ and some people miss out because they don’t want to learn a new skill
  • Impatience: triple digit returns are exceptional by almost any standard. But may seem “slow” compared to leveraged trading, for example.


What’s next?



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