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added a blog entry that would be helpful and corrected spelling on a few things
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(added a blog entry that would be helpful and corrected spelling on a few things) |
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On | On crypto markets perpetual futures or '''perps''' are contracts that never expire. You can buy as many perpetual futures as you like, you won’t ever take delivery of the underlying cryptocurrency. Therefore, there needs to be some other mechanism to ensure the perpetual future trades as close to the spot price as possible. | ||
The exchanges use a mechanism called funding, a payment between those who have gone long on the perp and those who have gone short, to ensure that the perpetual prices converge to spot. | The exchanges use a mechanism called funding, a payment between those who have gone long on the perp and those who have gone short, to ensure that the perpetual prices converge to spot. | ||
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Essentially, funding rates are designed to encourage traders to take positions that keep perpetual contract prices line in with spot markets. | Essentially, funding rates are designed to encourage traders to take positions that keep perpetual contract prices line in with spot markets. | ||
== See More == | |||
[https://juicedprotocol.medium.com/funding-rates-a-beginners-guide-94c6e587951b Funding rates: A beginners guide by Juiced] | |||
Sources: | == Sources: == | ||
[https://t.me/s/defillama_tg/219 DefiLlama Round Up Reads posts] | |||
[https:// | |||
https://juicedfinance.medium.com/funding-rates-a-beginners-guide-94c6e587951b | https://juicedfinance.medium.com/funding-rates-a-beginners-guide-94c6e587951b | ||
[[Category:Glossary]] | [[Category:Glossary]] | ||