Define “Cost of Carry” in the Context of Futures Pricing

The cost of carry is the net cost of holding the underlying asset from the present until the futures contract's expiration date. For financial assets like cryptocurrencies, it primarily consists of the interest expense on the funds borrowed to buy the asset, minus any income generated by the asset (e.g. staking rewards).

A positive cost of carry typically leads to a futures price that is higher than the spot price (contango).