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Fuq Peng, Chief Economist of Xinhuo Group: The essence of Bitcoin perpetual contracts is large holders renting out their long-term positions, while retail traders use leverage to go long and pay fees

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ME News message: On April 25 (UTC+8), Fu Peng, the newly appointed Chief Economist of Bitnew 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 spot exchanges for gold and industrial commodities. Fu Peng pointed out that, back when gold exchanges settled via daily forced liquidation, long and short positions paid deferred fees to each other. When retail investors hold large leveraged long positions, deferred fees become the most stable and well-hidden source of revenue for the platform. Today, Bitcoin spot platforms mainly rely on perpetual contracts, with the funding rate settled between longs and shorts every 8 hours. When longs are dominant, retail investors with long-term positions continue to pay the funding rate to shorts. While the platform does not directly collect this fee, it significantly boosts trading activity, open interest, and liquidity—indirectly generating substantial trading fee income and forming stable, large cash flow. In essence, it is a business model where large holders/institutions with long-term positions “collect rent,” retail investors pay for leverage-driven longs, and platforms indirectly skim off funds. (Source: ChainCatcher)
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