What Is the Concept of 'Zero-Fee' Trading and How Is It Funded? ⎊ Path

What Is the Concept of ‘Zero-Fee’ Trading and How Is It Funded?

Zero-fee trading is a model where an exchange charges no direct commission on trades. It is typically funded through other revenue streams, such as charging for premium services, earning interest on collateral, selling order flow data, or through the funding rate mechanism in perpetual futures.

The goal is to attract high-volume traders.

How Does the SEC Distinguish between an Initial Sale and Secondary Sales under Securities Law?

How Does the Concept of “Payment for Order Flow” (PFOF) Relate to Market Maker Incentives?

How Does the Concept of “Premium” Relate to the Fee Charged by a Mining Pool Operator?

How Did the SEC V. Ripple Labs Case Influence the Application of the Howey Test to Different Types of Crypto Sales?

How Does the Use of Collateral in Margin Accounts Influence the Effective Financing Cost?

How Does the Concept of ‘Funding Rate’ in Perpetual Swaps Relate to the Risk-Free Rate in Traditional Finance?

What Is a “Commission-Free” Options Trade and Where Is the Cost Usually Hidden?

How Are Crypto Futures Insurance Funds Typically Replenished or Funded?

Glossar

Funding Rate Mechanism

Mechanism ⎊ Funding Rate Mechanisms within cryptocurrency derivatives represent periodic payments exchanged between traders holding opposing positions in perpetual contracts, designed to anchor the perpetual contract price to the underlying spot market.