Detailed explanation of coin-based arbitrage funding fees

I will try to explain it in plain language.

Coin-based means that you must have this coin to operate.

For example, if you want to do coin-based BTC, you must first hold BTC. You use your BTC to make an agreement with your counterparty.

Step 1: Buy the spot you want to do coin-based arbitrage. For example, BTC

Step 2: Find a trading pair

Example: BTC/USDT contract This is a coin-based contract. When you open an order, you will find that you need BTC instead of USDT.

BTC/USDT contract This is a U-based contract. You need USDT to open an order

Third: Set the leverage multiple of the position-by-position option to 1. Open a short order.

Then wait for the corresponding funding fee to be collected at 0, 8, and 16 o'clock every day.

Because it is a coin-based contract, the funds paid to you by the counterparty are also in the corresponding currency.

For the obtained coins. There are generally two ways to deal with it:

1. Wait for it to rise, because it is now a bull market, and the currency obtained will generally rise, earning more interest.

2. Open a 1x short position directly, which is equivalent to compounding the interest.

Which one you choose depends on your personal preference.