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Hi all,

I’m trying something new. Until now, this newsletter has been a quick snapshot of the week’s big stories. But lately there’s so much happening in the odd corners of crypto that I want to take more space to unpack the things that catch my eye. Hope you enjoy my ramblings.

This week’s odd corner: perpetual futures on tokenized real-world assets (RWAs). Esoteric, yes. But some think these products, not tokenized stocks themselves, will drive the entire RWA boom. Let’s unpack it.

A Quick "Perps 101"

Perpetual futures, or “perps”, are crypto derivatives that let traders bet on the future price of an asset and never expire. Suppose you expect bitcoin’s going to soar even higher. You can go long on a bitcoin perp and stay in the trade for as long as you like. To do so, you don’t need to pay for the full value of the position upfront. Instead, you only put down margin, a fraction of the trade’s size, and the rest is covered by leverage. That structure lets a relatively small deposit control a much larger position, which is part of why perps are so appealing to traders.

Of course, that raises a question: if there’s no expiration date, what keeps perp prices from drifting away from the real market? The answer is the funding rate. Every few hours, traders on one side of the market pay a fee to traders on the other. If demand for longs is stronger, long traders pay the fee to short traders; if sentiment flips bearish, shorts pay longs instead. These small funding payments are automatically deducted from (or credited to) your account while you’re holding the contract. For example, say you have a $10,000 long position in a bitcoin........

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