How to keep balance for price in perpetual contracts and spot?

The exchange maintains the balance between the prices of cryptocurrency perpetual contracts and spot markets primarily through the funding rate mechanism.

The funding rate is a periodic fee that facilitates the convergence of contract prices to spot prices through exchanges between traders.

When there is a significant difference between the perpetual contract price and the spot price, the exchange calculates the funding rate based on market conditions and collects or pays funding fees from long position holders to short position holders. If the perpetual contract price is higher than the spot price, long position holders need to pay funding fees to short position holders. Conversely, if the perpetual contract price is lower than the spot price, short position holders need to pay funding fees to long position holders. This mechanism encourages traders to keep the contract price close to the spot price, thereby avoiding potential arbitrage opportunities.

Through the funding rate mechanism, the exchange can maintain the balance between the prices of cryptocurrency perpetual contracts and spot markets, ensuring that the price difference between the contract market and the spot market remains within a small range.