Understanding open interest, funding rates, and the differences between futures contracts is the starting point for any investor interested in trading crypto-based derivatives. However, each exchange has its own order book, index calculation, leverage limits, and rules for cross and isolated margin. These differences might seem superficial at first, but they can make a huge difference depending on a traders' needs.
Variable funding rates
Some exchanges allow clients to use very high leverage and while this might not pose an overall risk as liquidation engines and insurance funds are in place for these situations, it will pressure the funding rate. Thus, longs are usually penalized on those exchanges.
Bybit and Binance usually display a higher funding rate, while OKEx constantly presents the lowest. Traders need to understand that there are no rules enforcing this, and the rate may vary between assets or momentarily leverage demand. Even a 0.05% difference equals 1% in additional costs per week, meaning, it is essential to compare the funding rate every once in a while, especially during bull markets when the fee tends to escalate quickly.
Open interest
the total aggregate futures open interest rose from $19 billion to the current $41 billion in three months. Meanwhile, the daily traded volume has surpassed $120 billion, higher than gold's $107 billion.
While Binance futures hold the larger share of this market, a number of competitors have relevant volumes and open interest, including FTX, Bybit, and OKEx. Some differences between exchanges are obvious, such as FTX charging perpetual contracts (inverse swaps) every hour instead of the usual 8-hour window.
Stablecoin versus token-margined contracts
As for the crypto exchanges, most will allow up to 100x leverage. Tether (USDT) orders are usually denominated in BTC terms. Meanwhile, the inverse perpetual (token margined) order books are displayed in contracts, which might be worth $1 or $100 depending on the exchange.
In addition to USDT-based contracts, OKEx offers a USDK pair. Similarly, Binance perpetual futures also offers a Binance USD (BUSD) book. Therefore, for those unwilling to use Tether as collateral, there are other options available.