What Is a Funding Rate?
A funding rate is the periodic payment between long and short holders that keeps a perpetual future trading near the spot price. How it works, who pays whom, and how to read it.
ReadExplainers on the mechanics behind the dashboards — funding, open interest, liquidation, and how perpetual DEXs and prediction markets are actually built. No live figures here on purpose: these pages cover how things work, not what they are doing today.
TL;DR
Twelve explainers covering perpetual DEX and prediction market mechanics: what funding rates and open interest measure, how liquidation and delta-neutral strategies work, how order book and pool-based venues differ, and how to read volume, TVL and protocol revenue.
A funding rate is the periodic payment between long and short holders that keeps a perpetual future trading near the spot price. How it works, who pays whom, and how to read it.
ReadOpen interest is the total value of derivative positions currently open. What it measures, how it differs from volume, and what rising or falling open interest actually tells you.
ReadPerpetual DEXs let traders take leveraged positions without handing custody to an exchange. How margin, matching, oracles and liquidation fit together on-chain.
ReadA liquidation is the forced closure of a leveraged position when its margin falls below the maintenance requirement. Why it happens, how cascades form, and how the shortfall is covered.
ReadFunding arbitrage collects the payment between longs and shorts while hedging away price exposure. The two common structures, what the real costs are, and how the trade fails.
ReadA delta-neutral position has no net exposure to price direction. What delta means, how neutrality is constructed and maintained, and why neutral does not mean safe.
ReadPerpetual DEXs either match traders on an order book or trade them against a liquidity pool at an oracle price. What each design does well, and what it costs.
ReadThe practical differences between trading perpetuals on-chain and on a centralised exchange: custody, transparency, execution, and the risks each one carries.
ReadVolume is the most quoted and least examined metric in perpetual DEX analytics. What it includes, why venues disagree, and which figures to trust.
ReadTotal value locked measures assets deposited in a protocol. What it captures, the ways it misleads, and what to read alongside it.
ReadFees and revenue are used interchangeably and mean different things. What each captures for a perpetual DEX, and how to use them in valuation.
ReadPrediction markets let people trade contracts that settle on real-world outcomes. How pricing, settlement and resolution work, and where the model breaks.
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