3 ms·
If the contract never expires, what mechanism keeps the price of the contract in line with the price of the physical good?
by ProjectArcturis 3y ago
If the contract never expires, what mechanism keeps the price of the contract in line with the price of the physical good?
- red2awn 3y agoThrough "funding". If the perpetual future's price is above (below) spot's price, long holders pay (receive) short sellers an interest at a regular interval (every 8 hours at most crypto exchanges).
- julianhul 3y agoPeriodic exchange of money between longs and shorts, AKA "funding". If the contract price is above the price of the physical good, holders of the contract ("longs") pay the sellers of the contract ("shorts") a small fee every few hours. This makes it less valuable to hold the contract, and pushes the price of the contract down, until its on par with the price of the physical good.
- monero-xmr 3y agoPay a fee to maintain the contract. Must post collateral if price moves against you or get liquidated.
- smabie 3y agoThis doesn't answer his question.