London, United Kingdom--(Newsfile Corp. - April 25, 2022) - Huobi Global, one of the world's leading digital asset exchanges, today announced the launch of a funding rate arbitrage product for perpetual swap trading, enabling traders to gain profits from high-yielding funding fees while optimizing their investment strategies.
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Similar to other types of derivatives, perpetual swaps allow traders to speculate on the future price movements of cryptocurrencies with the core difference being that perpetual swaps do not have expiration dates. Under such circumstances, exchanges implement a funding rate mechanism which helps balance the short and long positions of perpetual swaps by either incentivizing or discouraging traders.
Funding rates play a significant role in the perpetual swaps market because they help balance the demand for the short and long side of perpetual swaps, keeping the contract price in line with the spot price at all times. Funding rates vary as the prices of the underlying assets turn bullish or bearish. Traders will either pay or receive funding rates depending on their open positions: when the funding rate is positive, the longs should pay the shorts, and vice versa. Huobi Global calculates the funding rate three times a day.
The launch of the new funding rate arbitrage product allows traders to gain funding fees through...
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