Chief Economist of New Fire Group, Fu Peng: The Nature of Bitcoin Perpetual Contracts is Large Holders Collecting Rent from Long-Term Positions, While Retail Investors Pay for Leverage

Fu Peng, the newly appointed Chief Economist of New Fire Group, stated on Twitter that the underlying business model of Bitcoin perpetual contracts is essentially the same as the ‘rollover fee/overnight fee’ in traditional finance, such as gold and industrial commodity spot exchanges. Fu pointed out that in the past, gold exchanges would enforce daily forced liquidation settlements, where long and short positions would pay each other rollover fees. When retail investors hold large leveraged long positions, the rollover fees become the most stable and hidden source of income for the platform. Currently, Bitcoin spot platforms mainly rely on perpetual contracts, with funding rates settled every 8 hours between long and short positions. When long positions dominate, retail investors with long-term holdings continuously pay funding rates to short positions. Although the platform does not directly charge this fee, it significantly increases trading activity, open interest, and liquidity, indirectly generating substantial fee income and forming a stable and large cash flow. Essentially, this is a business model where large holders/institutions collect ‘rent’ from long-term positions, retail investors pay for leverage, and the platform indirectly takes a cut.