$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 lower than the calculated spot mark price, the funding rate is negative, with shorts paying longs, encouraging longs to open positions and shorts to reduce, thereby pushing the contract price higher and bringing the two prices closer together, and vice versa.
But 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 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 price. Then, with a small amount of funds, they can push up the spot market, causing the contract price to rise accordingly. The more they manipulate, the higher the control, and the greater the profit from the contract.
After pushing the price up the ranking 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 biggest 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 lose more, like boiling a frog in warm water—eventually, they will be squeezed out. If shorts close their positions, it will only push the contract price higher, providing an opportunity for the market maker to offload. Neither closing nor not closing is correct.
To attract shorts, project parties will continuously release various messages during this rise, such as a large amount of spot collateral being released, urging everyone to short. 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 no spot holdings. $RIVER