The Funding Rate is used to compensate for price discrepancies between "spot" and "futures". If multiple traders are long on a crypto asset, they are pushing the futures price above the spot price. To correct this, long traders pay a fee (Funding Rate) to short traders, bringing the futures prices back in line with the spot price (this is the positive Funding Rate). When the Funding Rate is negative, it means that most traders are taking short positions and pushing the futures price below the spot price. Short traders (sellers) pay a fee to long traders (buyers).

To maintain an open position, the Positive Funding Rate can range from 1 to 150% per year. The Funding Rate varies based on the platform/exchange you are using because it essentially depends on the open positions of users. The idea of ​​this strategy is to open an equal and opposite position (1 ETH Long on Ostium, 1 ETH Short on Hyperliquid o Paradex ) and find 1 asset where:

1) Long (or Spot) Position where the Funding Rate is minimal (very small positive FR) or you even get paid (Negative FR).

2) Short Position where you get paid (very high Positive FR).

In this case, you are not exposed to market volatility but you earn from the positive FR on the short position (it is an arbitrage, compared to the Long/Spot position). If you do not use an exchange for long, you could use a spot position on ETH and also earn from staking.

RISKS
What are the risks of this strategy that brings mathematical profit?
1) Liquidation of one of the two accounts if you use leverage (if the market moves sharply you could be liquidated. Even if the opposite operation compensates the losses of the liquidated account, you must consider the liquidation fees and the closure of the operation).
2) Hack the platforms you are using.
3) Make sure there is liquidity to avoid too much slippage.
4) Consider the trade fees that vary based on the size and leverage used.

FUNDING RATE SITES
Real time FR and automatic highest/lowest search: MyTokenCap

Current and forecasted FR: Coinalyze

FR tracking and comparisons for each crypto: CryptoFundingTracker

Arbitrage, historical values, highest and lowest FR: Coinglass

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