Someone asked me what to do when the funding rate gets extremely high. My approach is just two words: hide.

It’s not that I’m scared—it’s just my personality: I’m always a half-step behind. When this happens and you rush in to trade against the other side, you’re very likely just handing them a free meal. Look at what’s going on with those Layer2 projects right now—they’re fighting with each other like crazy, comparing TPS, fees, and subsidies, like they’re picking a consort. But to put it plainly: since hot spots rotate that fast, the funding rate can skyrocket. If you go do counterparty trades at that time, you’re basically the one stuck holding the bag—you might end up watching them profit while you’re left on the sidelines.

I’ve tried it a few times. In the end, the result is always the same: better to be slow. Wait for the funding rate to come down, wait for everyone’s emotions to cool off, and then slip in—hang around as liquidity and make some steady, safer money. For someone like me, as long as I’m not the one getting skewered (not the one being the “needle target”), I’m still the one winning.