Farms funding rates: opens positions to collect periodic funding payments.
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Funding Farmer is a funding rate 'farming' strategy that systematically collects the funding rate on crypto perpetual contracts as a yield source. In bullish markets, long traders pay a positive funding rate to short traders — Funding Farmer positions on the receiving side (short futures + long spot to be delta neutral) and 'farms' this income every 8 hours, like a farmer who harvests regularly.
Analyzes the 30-day average funding rate. If average funding is positive (bullish market = longs pay), opens a delta neutral position: short futures + long spot. Collects funding every 8h. If average funding is negative (bear market = shorts pay), inverts position: long futures + short spot. Objective: always be on the side that receives funding.
30-day average funding rate. Funding direction (positive = contango, negative = backwardation). Funding magnitude (annualized). Funding volatility (income stability). Open Interest as liquidity measure.
Low
Funding collected every 8h. Delta neutral: reduced directional exposure (counterparty, liquidation and execution risks remain). Historical yield varies with the funding regime. Simple to understand and execute. Works in both bull AND bear markets (adapts to funding direction).
Variable returns (funding rate fluctuates). Liquidation risk on futures side if very sharp movement. Capital tied up (spot + futures margin). Periods of zero or fluctuating funding reduce returns.
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