Fu Peng, chief economist of Xinhuo Group: The essence of Bitcoin perpetual contracts is that large households hold long-term positions to collect rents, and retail investors leverage to pay more

Fu Peng, the new chief economist of Xinhuo Group, tweeted that the underlying business model of Bitcoin perpetual contracts is essentially the same as the "deferred fees/overnight fees" on gold and industrial product spot exchanges in traditional finance.<br /> Fu Peng pointed out that in that year, the gold exchange settled through daily compulsory closing positions, and long and short positions paid deferred fees to each other. When retail investors hold a large number of highly leveraged long positions, deferred fees become the most stable and hidden source of income for the platform. Today, the Bitcoin spot platform mainly relies on perpetual contracts, with both long and short parties settling capital rates every 8 hours. When bulls dominate, retail investors with long-term positions continue to pay funding rates to short positions.<br /> Although the platform does not directly charge this fee, it has significantly increased trading activity, open interest and liquidity, indirectly bringing in a large amount of fee income and forming stable and huge cash flow. In essence, it is a business model in which large households/institutions hold long-term positions to "collect rent", retail investors leverage to pay more, and indirect pumping of water from the platform.