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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 and collect rent, while retail traders use leverage to go long and pay fees

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ME News message, April 25 (UTC+8). Fu Peng, the newly appointed Chief Economist of Newhuo Group, posted on X saying that the underlying business model of Bitcoin perpetual futures contracts is essentially the same as the “deferred fees/overnight fees” charged by traditional finance spot exchanges for gold and industrial commodities. Fu Peng noted that, back then, gold exchanges enforced daily compulsory liquidation and settlement, where long and short counterparties paid deferred fees to each other. When retail investors massively held highly leveraged long positions, deferred fees became the platform’s most stable and well-hidden source of income. Today, Bitcoin spot platforms mainly rely on perpetual contracts, with the long and short sides settling the funding fee rate every 8 hours. When longs have the advantage, retail investors holding long-term positions continue to pay the funding fee rate to shorts. Although the platform does not directly collect this fee, it significantly increases trading activity, open interest, and liquidity, indirectly generating large amounts of trading-fee revenue and forming stable, massive cash flow. Essentially, it’s a business model where large holders/institutions “collect rent” from long-term positions, retail leverage longs pay for it, and the platform indirectly siphons off the flow. (Source: ChainCatcher)
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