What is funding in crypto?πŸ‘‡


What is funding in crypto?

Funding β€” is like a commission that traders pay each other when trading futures with leverage. If the futures price significantly differs from the actual cryptocurrency price, funding helps align them.

Traders whose bets don’t match the general market direction pay funding, while those whose bets align receive it. It acts as a penalty or bonus for traders depending on their positions.

Thus, funding in crypto acts as an incentive for traders to align their trading strategies with the general market trend.

:chart_with_upwards_trend:If the market is generally going up and you hold a long position (i.e., betting on the rise), you will most likely receive funding.

:chart_with_downwards_trend:If the market is falling and you hold a short position (betting on the decline), you will also likely receive funding.

This mechanism regulates to prevent excessive speculation and a too large gap between the futures price and the real cryptocurrency price. Ultimately, funding helps make trading fairer and more tied to actual market conditions

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Insightful, thanks

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haha, i was just talking to my coworker this morning about funding. funny timing. this is a good explanation - thanks for sharing :slight_smile:

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You welcome ser

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Thanks for sharing this mate

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You welcome ser :clap::clap::clap:

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Great information. Thanks for this.

You welcome ser :clap:

Thanks for this mate

You welcome boss

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