I don't know if you who are still crazy about scoring points feel that the threshold for Alpha is getting higher and higher. The frequency of airdrops is increasing, and the intensity of points is fierce, but the 'thrill' of getting airdrops is constantly declining. Perhaps Binance has discovered this problem and has now introduced a 'points consumption mechanism,' which might be a clever move. So let's wait for Binance's detailed announcement to see if ordinary people have a chance to sit at the table for a meal!
While most people focus on the Alpha project, we can also take a look at funding rates, which might help you discover new profit opportunities.
Funding rate arbitrage sharing
In my opinion, arbitrage with funding rates is a more stable and profitable method than just scoring points. Take mainstream coins as an example, the funding rate generally fluctuates around 0.01%. If it is positive, then at settlement, long positions have to pay funding fees to short positions. Conversely, if it is negative, then short positions have to pay funding fees to long positions. This is also a way to smooth out the price difference between spot and contract!
What we need to do is find currencies with abnormal funding rates. Some settlement frequencies can reach up to once an hour, which means 24 settlements a day—just think about that! For example, yesterday's $LAYER , the funding rate shot up. As long as you get the direction right (go long), you can earn funding fees every hour!
Assuming you have 10000u
Shorting 5000u in spot and going long 5000u in contracts, these two parts are hedged, and what we earn is the funding fee given to you in the contract every hour.
The cost of borrowing coins for leveraged short positions is 0.02% per hour (0.02%x5000u=1u)
Contract order fee (closing position) = 5000 x 0.00018=0.9u
Contract market order fee (opening position) = 5000 x 0.00045=2.25u
Total cost = 1 + 0.9 + 2.25 = 3.15u
Layer contract funding fee profit (simulation)
As we can see, the final profit minus 3.15u still has a profit of 800u+, compared to our Alpha airdrop profit, isn't the funding fee profit more considerable!
Supplement:
Many friends will definitely ask what role hedging plays. It's actually easy to understand. First, we assume that both the contract and spot leverage are 1x. When the spot leverage increases by 10%, you lose 10%. The part of your contract long position compensates for this loss! So your principal is still 10000u.
I am just sharing here. Trading is, after all, an investment, so if you want to make money, you must understand the principles and know what money you are making; otherwise, you will just be someone else's ATM!
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