Contracts can make retail investors rich overnight, but can also bankrupt big players in 3 days.
It is both the nuclear weapon of Wall Street and the harvester in the cryptocurrency space.
Let’s explain the understanding of contracts to novices, starting with the hardest truth: 83% of wealth in the world is related to contracts, but 98% of retail investors are cannon fodder.
Now, here comes the key point: this contract was originally designed as a pitfall prevention tool for farmers. In 1848, Chicago farmers collectively collapsed, and vegetable prices fluctuated so much that it turned people's hair white overnight. The plight of farmers back then has now evolved into Bitcoin miners worrying about price halving, quantitative teams in exchanges frantically trading, and retail investors playing Russian roulette with perpetual contracts.
Let's compare: traditional agricultural contracts lock in price fluctuations at around ±5%, while modern cryptocurrency contracts can leverage up to 125 times, and some small exchanges even reach 300-400 times. Data from a certain exchange shows that 90% of retail investors open positions close to the liquidation line, while institutional account take-profit and stop-loss lines are always 300% lower than those of retail investors. Tesla hedges lottery risks with contracts, and European companies use perpetual contracts to consume the margin of retail investors. The essence of contracts is the ultimate form of zero-sum game; every penny you earn comes from the liquidation notice of the opposing account. The greater the leverage amplifies profits, the greater the risk of consuming the principal. Exchanges use insurance funds to subsidize liquidation, and large players manipulate marked prices together. Data from a certain blockchain shows that 30% of liquidations on a leading exchange were all targeted explosions from a single IP cluster. When contracts become mental opium, and leverage turns into a gallows, in this zero-sum game, are you the hunter or the prey?
