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New Huohuo Group Chief Economist Fu Peng: The essence of Bitcoin perpetual futures is that large holders hold long-term positions to earn rental income, while retail investors use leverage to go long and pay fees

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ME News message, April 25 (UTC+8), Peng Fu, the newly appointed chief economist of New Huojituan, posted on X stating that the underlying business model of Bitcoin perpetual futures contracts is essentially the same as the “deferred fee/overnight fee” of spot exchanges for gold and industrial commodities in traditional finance. Fu pointed out that back then, gold exchanges settled daily via mandatory forced liquidation, with long and short parties paying deferred fees to each other. When retail investors hold large amounts of highly leveraged long positions, deferred fees become the platform’s most stable and hidden source of revenue. Today, Bitcoin spot platforms mainly rely on perpetual contracts: both long and short sides settle the funding rate every 8 hours. When longs have the advantage, retail investors holding long positions continue to pay the funding rate to shorts. Although the platform does not directly collect this fee, it significantly boosts trading activity, open interest, and liquidity, indirectly generating a large amount of trading fee revenue, forming a stable and massive cash flow. Essentially, it is a business model where large holders/institutions “collect rent” from long-term positions, retail leverage longs pay for it, and platforms indirectly siphon the funds. (Source: ChainCatcher)
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