Cost of Long-Term Leverage
Leverage in the crypto asset market has primarily been provided through derivatives markets centered on perpetual futures. While leverage enhances capital efficiency by allowing large positions to be constructed with minimal principal, its design assumes short-term trading, and maintaining positions over the long term incurs multiple structural costs.
Cost Structure of Long-Term Leverage
Funding Rate as a Structural Cost
Perpetual futures employ funding rates to suppress divergence from spot prices. Funding rates are settled at regular intervals that vary by exchange, with either longs or shorts making payments to the other side.
While individual funding rate payments often appear small, they accumulate reliably over time. When maintaining positions for weeks to months, funding rates act as a cost that erodes profit and loss regardless of price direction.
Margin Requirements and Liquidation Risk
Perpetual futures require constant maintenance of a specified margin ratio. Even temporary adverse price movements can trigger margin calls or forced liquidations.
Due to the high volatility of crypto asset markets, this structure constantly embeds the risk of liquidation from short-term fluctuations, even for positions that are correct over the long term. This structure makes long-term asset formation difficult.
Market Dependency and Yield Fragility
As the Ethena case demonstrates, funding rates can serve as a source of yield, but this is strongly dependent on market conditions. When funding turns negative or derivatives market liquidity declines, profitability deteriorates rapidly.
In other words, yield in traditional leverage models is not structurally stable but a fragile element dependent on external market conditions.
Redefining Leverage at the Protocol Level
Hypezion Finance redefines leverage not as a trading action actively managed by users, but as a structure embedded within the protocol itself. By decoupling time-dependent costs such as funding rates, margin management, and liquidations from users, it provides leveraged exposure suitable for long-term holding.
This design enables risk-taking and value accumulation from a long-term perspective, which has been difficult to achieve with traditional perpetual futures. Hypezion Finance aims not at short-term speculation, but at building sustainable on-chain financial infrastructure.