Why Is a Stable, Near-Zero Funding Rate Generally Desirable for a Perpetual Contract Market?

A stable, near-zero funding rate is desirable because it indicates that the perpetual contract price is closely tracking the spot price, meaning the market is in relative equilibrium. This stability reduces the financing cost for both long and short positions, making the contract a more accurate and efficient tool for speculation and hedging, and reducing the risk of sudden, expensive funding rate spikes.