What is the significance of funding rates for perpetual swaps in the context of cryptocurrency trading?

1 answers

• Ayush KhareJan 21, 2022 · 4 years ago
  Funding rates for perpetual swaps are of great significance in cryptocurrency trading. These rates are determined by the market and are used to incentivize traders to balance the demand for long and short positions. When the market is bullish and there are more long positions, the funding rate becomes positive, encouraging traders to take short positions and balance the market. Conversely, when the market is bearish, the funding rate becomes negative, incentivizing traders to take long positions. This mechanism helps to maintain stability in the market and prevent excessive price manipulation. At BYDFi, we closely monitor funding rates to ensure fair and transparent trading conditions for our users.
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