$RIVER 21st Century's Greatest Conspiracy — Funding Fees

As the name suggests, perpetual contracts never have an expiration date and do not require delivery, so funding fees are needed to keep the spot and contract prices aligned. This concept is actually very genius.
When the contract price is less than the calculated spot mark price, the funding rate is negative, with shorts paying longs, encouraging longs to open positions and shorts to reduce positions, thereby pushing the contract price higher and bringing the two prices closer together, and vice versa.
However, the problem lies in the fact that the trading scale and liquidity of the spot market and the contract market are completely different. So as long as project parties or market makers hold large amounts of spot, the liquidity in the spot market becomes even more tight.
If previously the project party or market maker secretly accumulated large long positions in the contract market, this is not difficult to achieve, simply by continuously placing orders in the contract market and slightly manipulating the spot market. Then, with a small amount of funds, the spot market can be pushed up, causing the contract price to rise accordingly. The more the control, the higher the profit for the market maker.
After pulling into the top gainers list, many shorts are attracted, and the spot price is still rising, creating a price gap. The funding rate begins to turn negative, but this is not enough. The market maker directly pushes the funding fee to -2, maintaining it for a period, turning the funding rate into a one-hour cycle to continuously harvest shorts.
At this point, the greatest conspiracy begins. If shorts do not close their positions, the market maker can use the hourly funding fees to further push up the spot market, and shorts will only become more亏损, like frogs boiling in hot water, eventually dying. If shorts close their positions, the contract price will continue to rise, providing an opportunity for the market maker to offload. Neither is correct, neither is wrong.
To attract shorts, project parties will continuously release various messages during this rise, such as a large amount of spot being unlocked, urging everyone to short quickly. Or they may artificially create a large red upper shadow on the candlestick, attracting right-side short sellers to enter, leading to a tragedy.
For everyone's health, stay away from projects with 1-hour funding fees and spotless projects. $RIVER