Now the heat of $aster has fallen a bit, I can say a little about how to play the funding rate.

The image shows the annual funding rate of $aster on different exchanges, meaning that if you buy, how much you need to pay to the seller each year.

The most interesting thing in this picture is the funding rate between centralized exchanges (cex) can differ by up to 2 times - this is clearly an opportunity for arbitrage. So why does this situation occur (that is, contract price > spot price)? Is it a moral decay? Or a lack of courage? )))) Not at all...

1. First, let's talk about the principle, generally based on the risk prevention principle, mm will not have long/short positions without insurance, simply put, mm will hold/sell a certain amount of goods, and then open corresponding positions in the futures market.

2. A positive funding rate theoretically means that there are more buyers, thus the contract price > spot price; In the case where the buyer has to pay the seller, the market maker (mm) needs to act as the seller to collect the funding fee, and to hedge the risk, the market maker needs to buy back the corresponding spot asset for hedging.

3. At this point, interesting things start to emerge, for various reasons (cz calling orders, looking at perp dex whatever), more and more people are participating in opening long positions, while mm continues to open short positions to earn funding rate and will buy goods for hedging.

4. After that, retail investors saw the price keep rising, they continuously FOMO into opening buy positions, then market makers saw you going crazy like that and also bought the underlying asset to open sell positions, and OI has actually increased.

The @Aster_DEX project is also very happy to see this situation.

5. Why not buy goods directly, this is divided into several stages:
In the early stages, because at first it was not possible to buy, do you remember that aster was initially just a single coin? People who wanted to participate had to buy apx or open a contract.
In the medium term, the liquidity of spot contracts is better than the liquidity of the ( spot market, which is very little, and many people are holding without selling.
Now, adding to the story of perpdex + the effect of leverage + relatively stable price ) mentions the stimulation of increasing volume, but I think the impact is not significant ( - So just play in the contract market.

6. Regarding when, or in what case a collapse will occur, please wait for the next explanation, okay? 🤣🤣

) I will send to the pre-registration account.