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Peng Fu, chief economist of New Huo Group: The essence of Bitcoin perpetual contracts is that large holders hold long-term positions to collect rent, while retail traders use leverage to go long and pay fees.

MeNews
ME News: On April 25 (UTC+8), new Huo Group’s newly appointed chief economist Fu Peng posted on X, saying the underlying business model of Bitcoin perpetual futures contracts is essentially the same as the “deferred fees/overnight fees” in traditional finance’s gold and industrial commodities spot trading exchanges. Fu Peng noted that, back then, gold exchanges used daily forced liquidation settlement, with long and short parties paying deferred fees to each other. When retail investors massively held leveraged long positions, deferred fees became the most stable and covert source of revenue for the platform. Today, Bitcoin spot platforms mainly rely on perpetual contracts, with both long and short sides settling funding rates every 8 hours. When longs have the advantage, retail holders of long-term positions continuously pay the funding rate to shorts. Although the platform does not directly collect this fee, it significantly increases trading activity, open interest, and liquidity, indirectly generating substantial 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 levered longs pay, and platforms indirectly skim the proceeds. (Source: ChainCatcher)
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