According to Andre Cronje's article on X platform regarding a new trading mechanism in the cryptocurrency industry, a new infrastructure is currently gaining a lot of attention and is being integrated into what he believes is a low-risk protocol. However, based on his (possibly incorrect) understanding, this new protocol carries a very high risk.
He discusses the components of this mechanism in detail, including the characteristics of perpetual contracts such as the ability to trade without holding the trading asset, both buyer and seller paying a "funding rate," and using stETH as collateral. He attempts to achieve "neutrality" by opening relative positions while benefiting from stETH returns and funding rates.
Cronje states that he is not a trader and acknowledges that this is not his area of expertise. However, he tries to compare these financial tools with the most basic financial concepts he knows, such as collateral and debt, and points out the risk of eventually having to close positions or face liquidation.
He raises a question about the theory of "positions being closed when the market reverses," which is similar to the saying "buy when BTC rises and sell when it falls," which sounds obvious but is almost impossible to achieve in practice. Therefore, although everything is going smoothly now (because the market is positive and the short funding rate is positive (because everyone is willing to go long)), the situation will eventually change, and the funding (rate) will become negative, collateral will be liquidated, and you will have an unsupported asset.