Funding Farming is considered capital-intensive because it requires sufficient funds to maintain both Spot and Futures positions simultaneously while keeping a safe margin buffer to prevent liquidation.
This ensures the strategy can capture funding fees effectively without taking excessive directional risk.
🔹 Reasons for High Capital Requirement
Large Spot Positions
The bot needs to hold a significant amount of the underlying asset in Spot to hedge the Futures position
Spot positions are unleveraged, so full capital is required
Simultaneous Futures Hedges
Futures positions are opened in the opposite direction to hedge market exposure
Even if partially leveraged, these positions require margin allocation
Margin Buffers to Avoid Liquidation
Leverage magnifies gains and losses in Futures
Maintaining a safe distance from liquidation price requires extra capital as a buffer
Cumulative Effect
Funding Farming often runs multiple concurrent trades (
max_open_trades)- Each trade requires both Spot + Futures capital, quickly increasing total capital needs
🔹 Recommendations for Smaller Accounts
| Risk Factor | Recommended Approach |
|---|---|
| Limited capital | Reduce spot_order_size and future_order_size |
| Leverage risk | Lower leverage or smaller Futures size |
| Multiple positions | Reduce max_open_trades to 1–2 |
- Conservative settings help capture funding fees without exposing the account to high liquidation risk
🔹 Key Takeaways
Funding Farming requires substantial capital for:
- Large Spot holdings
- Simultaneous Futures hedges
- Margin buffers to prevent liquidation
Smaller accounts should adopt conservative sizing and fewer concurrent trades
Proper capital allocation is critical to safely run Funding Farming and maximize funding fee profits