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Fu Peng, Chief Economist of Xinhuo Group: The essence of Bitcoin perpetual contracts is that big holders maintain long-term positions to collect rent, while retail traders use leverage to go long and pay for going long.

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ME News, 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 fee/overnight fee” in traditional finance’s gold and industrial spot trading exchanges. Fu Peng noted that, in the past, gold exchanges implemented daily mandatory liquidation settlements, with long and short parties paying deferred fees to each other. When retail investors massively hold highly leveraged long positions, the deferred fees become the most stable and covert source of revenue for the platform. Today, Bitcoin spot platforms mainly rely on perpetual contracts, where longs and shorts settle funding rates every 8 hours. When longs have the advantage, retail holders with long positions continue to pay the funding rate to shorts. The platform does not directly collect this fee, but it significantly increases trading activity, open interest, and liquidity, which indirectly brings in large amounts of trading fee revenue, forming a stable and sizable cash flow. Essentially, it is a business model where large holders/institutions “collect rent” via long-term positions, retail leverage longs pay for it, and platforms indirectly skim the proceeds. (Source: ChainCatcher)
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