🔧 Product basics

What are interest rate futures?

Interest rate futures are financial contracts designed to trade on future changes in interest rates. They work similarly to crypto futures but derive their value from interest rates, such as perp funding or staking rates, instead of cryptocurrency prices.

How do Rho Rate Futures work?

In Rho Rate Futures, a trader locks in a fixed interest rate to pay (if they are long) or to receive (short) from the moment of the trade until the contract ends or the position is unwound. The resulting PnL of the trade depends on a difference between that agreed rate and the floating interest rate over the holding period.

Examples of floating rates include:

• 8-Hour funding rates: The periodic interest rate paid between long and short positions in perpetual futures contracts on centralized exchanges, calculated every 8 hours based on market conditions.

• Staking rates: The variable return rate earned by staking cryptocurrencies on decentralized finance (DeFi) platforms.

How to profit from Rho Rate Futures

• Receivers (rate sellers): They receive a fixed rate and pay the floating rate over the contract period. They profit when market rates decline because the fixed rate they agreed on is higher than the floating rate.

• Payers (rate buyers): They pay the fixed rate and receive the floating rate over the contract period. They profit when market rates rise because the floating rate becomes higher than the fixed rate.