Now the annual interest rate for USDT savings is around 14%
Let me teach you a way for large funds to manage finances in the crypto space.
Investing 1 million to buy one coin, transferring to a contract to open a coin-based short contract at one times leverage. According to the current fees, you can obtain an arbitrage contract with a guaranteed annual interest rate of 120% that will never be liquidated.
Funding rate
This mechanism mainly arises from perpetual contracts, balancing the supply and demand of long and short positions through mutual fee payments to ensure that the price of perpetual contracts can continuously match the spot price of the underlying asset.
Calculation method for funding rate
I personally think the key points to understand are confirming the settlement every few hours and the proportion of positions charged.
Rate (F) = Average premium index (P)* + Clamp(interest rate (I) - premium index (P)*, 0.05% to -0.05%)
Let's discuss how to achieve hedging effects through shorting a coin-based contract at one times leverage.
Example 1
Example of shorting a BTC-based contract at one times leverage: one contract has a face value of 100
I bought 100 contracts, at this time BTC is 50000
Originally held 0.2 BTC
Later, the price of BTC fell to 40000
100*100(1/40000–1/50000)=0.05
So you actually earned 0.05 BTC
In the end, the number of BTC held is 0.2+0.05=0.25 BTC
Calculating based on the BTC/USDT closing price at that time, the value you finally obtained in USDT is
0.25*40000 = 10,000
Here’s another example of shorting a BTC-based contract at one times leverage:
The face value of one contract is 100
I bought 100 contracts, at this time BTC is 50000
Originally held 0.2 BTC
Later, the price of BTC rose to 60000
100*100(1/50000–1/60000)=0.0333333
So you actually lost 0.0333333 BTC
In the end, the number of BTC held is 0.2–0.0333333=0.16666667 BTC
Calculating based on the BTC/USDT closing price at that time, the value you finally obtained in USDT is
0.16666667*60000= 10,000
The conclusion is that regardless of whether the BTC price rises or falls, the value you hold (calculated in USDT) remains
unchanged.
Therefore, shorting with a coin-based approach has the following benefits
• No liquidation (opening one times leverage)
• In the process of rising and falling, the final value of U is almost preserved
• You can also earn funding fees (when you short a coin-based contract, if the funding rate is positive, the long side will pay you fees)
Want to double your account, want to enjoy big profits, want to successfully recover costs
Stay close to the market and seize the main upward trend of the bull market in advance!
