Advanced Ways of Decentralized Trading with Alpaca Finance’s Perpetual Futures Exchange

Introduction to on-chain Perpetual Futures contracts

The world of decentralized trading is evolving rapidly, and at the heart of this evolution is the concept of perpetual futures. This article explores the integral role of perpetual futures in hedging strategies and carry trading in crypto, highlighting the innovative features of Alpaca Finance’s platform that make it stand out in the decentralized finance (DeFi) ecosystem. Go to Alpaca Finance Perpetual Futures Exchange

Key Features

1. Funding Rates Farming

A standout feature of the Alpaca Finance Perpetual Futures Exchange is funding rates farming. This mechanism allows traders to earn by holding positions that are a counterbalance to the majority of the open interest on a given exchange. If most traders are long- shorts get paid. If most of the Open Interest is in shorts then longs get paid.

Alpaca Finance funding rates are compounded every hour which amplifies the compounding effect.

On centralized exchanges, you usually have funding fees compounded every 8 hours for which the revenues looks less exciting:

Check the file with Funding Rates Farming calculations

2. Long and Short BTC, ETH, and BNB on Perpetual Futures

The platform enables trading strategies like longing Bitcoin, Ethereum, and BNB or shorting those assets to hedge spot positions when the market is in a downtrend.

Go to the step-by-step guide for Perpetual Futures trading

Go to Traders Benefits in documentation

3. Delta neutral setup. Spot and Perpetual Futures Hedge

If you want to achieve a stable value of your portfolio in crypto or you anticipate a downtrend and you don’t want to liquidate your position you can hedge it with Perpetual Futures. You do it by creating a short position of the same size as your spot position. Thanks to leverage you can do it optimally by engaging a smaller amount of collateral Very often you can farm the hourly compounded funding fees which are the result of more Open Interest is on long rather than short. You can hold your position as long as the market goes down and funding rates are bringing you profit. After successfully closing a position in profit you will be able to buy more of the base asset you hold.

Conclusion

Trading on Alpaca Finance’s Decentralized Perpetual Futures Exchange opens a world of opportunities for crypto traders. Whether it’s for funding rates farming, hedging your portfolio or shorting top cryptocurrencies, the platform provides a secure, on-chain environment for both seasoned and novice traders. The ability to trade perpetual futures on the BNB chain, coupled with sophisticated hedging strategies, makes Alpaca Finance’s platform an invaluable tool in any trader's arsenal.

Start Perpetual Futures trading on Alpaca Finance