Why shouldn't you touch altcoin contracts? Let me do the math for you, and you'll see how much of a trap this thing is. #BTC# #MYX#

Take MYX, which has been quite popular these past few days, as an example. It charges a funding fee every hour. You heard that right, once every hour, and each time it directly takes away 2%. The key is that this fee is calculated based on the nominal value of your position — for example, if you open a position of 100U with 10x leverage, your position value is 1000U, so the funding fee each time would be 20U. After five hours, your 100U principal would be completely eaten away, and this doesn't even include the opening fee.

The handling fee is also charged based on the nominal value. If you open a position at market price, it’s about 0.4%. After going back and forth, it’s 0.8%. If you start with 100U capital and leverage 10 times, just the handling fee will deduct 8U, which means you lose 8% before you even start playing. What’s worse is the capital utilization rate with high leverage. While 100 times leverage looks impressive, in reality, you can only use 60%—it’s like borrowing 1 million from the bank, but they only give you 600,000, and the interest is calculated on the full 1 million. Isn’t that unfair? Want to make money? First, cover the "interest pit" of that 400,000 before talking.

This is also the reason why I have always only played with 10x and 20x leverage. The capital utilization rate within 20x can reach 95%, and I can break even with just a slight profit. All exchanges have a liquidation mechanism; with 100x leverage, if you lose 60%, you will be directly liquidated, while with 20x, you have to lose 95% to trigger it. High leverage in a volatile market, if held for a longer time, feels like entering an invisible meat grinder, gradually being worn down.

Many people always think that "as long as the price comes back, the money will come back," which is purely an illusion. High-frequency funding fees under leverage are a compound interest effect. Take the MYX rate for example; even if the price remains unchanged, a day's funding fee can eat away 5 times your margin. Even if you are lucky and your returns multiply by 5, after deducting the fees, you are actually still at a loss.

Moreover, all exchanges have an automatic position reduction mechanism. You see those orders that multiply dozens of times; they have very little actual funds left in them. Exchanges do not allow you to make too much profit. Generally, when leverage exceeds 20 times, automatic position reduction starts. If you open a 20x position with 100U, as it rises to a certain extent, they will close part of your position, continuously reducing it until it stops at around 30 times. The higher the leverage you open, the faster you will lose.

In contrast to Bitcoin and Ethereum, which have numerous institutions, companies, and even governments watching over them, their fees have remained stable at around 0.01%. However, altcoins are different; you are essentially gambling directly with the project parties and platforms, and they can cheat. A funding fee of 2% per hour, like that of MYX, is over a thousand times the normal rate. This is not just harvesting; it is uprooting.

There are also market price closing and opening fees of 0.05%, so opening a position of 100U at 100x leverage means a 10,000 U position, and one round trip costs 10U, which is equivalent to 10% of the total capital. High leverage also carries a fatal risk, as large forced liquidation orders can tear the order book apart, directly causing price spikes and triggering a chain liquidation. The drop from 42,000 to 30,000 during the 519 incident happened this way. Different exchanges have different depths, and the severity of price spikes varies, but they all have mechanisms for early liquidation. Even if you still have 40% of your principal, they might liquidate you, and that 40% becomes the exchange's profit — the worse you lose, the more they gain.

So, I sincerely advise everyone not to touch these altcoin contracts. They may look profitable, but they are all hidden traps, and once you get in, you're just a lamb waiting to be slaughtered.