Arbitrageur Incentives

Arbitrageur incentives are the economic rewards that encourage market participants to keep prices in line across different venues. In a healthy market, these incentives are high enough to attract traders who will quickly close any price gaps.

In the case of perpetual futures, the funding rate is the primary incentive; it rewards traders for taking positions that bring the contract price closer to the spot price. Without these incentives, markets would be inefficient, with significant price discrepancies and higher costs for participants.

Designing effective incentives is a core part of tokenomics and protocol design, as it ensures the long-term viability and stability of the derivative ecosystem.