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Feng Fu, Chief Economist of Xinhuo Group: The essence of Bitcoin perpetual futures is that large holders hold long-term positions to collect rent, while retail traders use leverage to go long and pay fees.

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ME News — On April 25 (UTC+8), Fu Peng, the newly appointed chief economist of New Huohuo Group, posted on X, saying that the underlying business model of Bitcoin perpetual futures is essentially the same as the “deferred fee/overnight fee” in traditional finance’s spot trading exchanges for gold and industrial commodities. Fu Peng noted that, back then, gold exchanges used daily mandatory liquidation and settlement, where long and short parties paid deferred fees to each other. When retail investors held large amounts of highly leveraged long positions, the deferred fees became the platform’s most stable and well-hidden source of revenue. Today, Bitcoin spot platforms mainly rely on perpetual contracts, with both long and short sides settling the funding rate every 8 hours. When longs have the advantage, retail investors holding long-term positions continue paying the funding rate to shorts. Although the platform does not directly charge this fee, it significantly boosts trading activity, open interest, and liquidity, indirectly generating a large amount of trading fee revenue and forming a stable and massive cash flow. In essence, it is a business model where whales/institutions “collect rent” from long-term holdings, retail leverage longs pay for it, and platforms indirectly skim off the proceeds. (Source: ChainCatcher)
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