Someone asked me whether to take the other side of the trade when the funding rate is extreme. I usually pause for two seconds: Am I really trading, or am I fighting against my emotions?

When the rate is ridiculously high, it’s indeed tempting to go against it, but honestly, that’s not “guaranteed interest,” it’s more like selling a volatility insurance — if the underlying accelerates further, your margin might not hold up.

My approach leans more towards a product mindset: first break down the process, confirm whether this is a “liquidation-style unilateral” move or “news + liquidity drain.”
I prefer to avoid the former; I might take a small position in the latter to earn some fee rate, but always with a clear exit condition. Otherwise, it’s like those new L1/L2 incentives to boost TVL — eventually turning into pump-and-dump, hurting honest traders.
Anyway, the most common trap with extreme rates is: you think you’re earning the fee, but in reality, you’re working for the trend.
That’s all for now.