Cost of Maintenance

In the context of cryptocurrency derivatives and options trading, the cost of maintenance refers to the ongoing financial obligations required to keep a leveraged position open. This primarily involves the funding rates in perpetual futures or the rolling costs associated with options contracts.

As a position is held, the trader must pay or receive periodic fees to align the derivative price with the underlying spot market price. Failure to meet these maintenance requirements, particularly when collateral values drop, leads to margin calls or liquidation.

It represents the friction cost of maintaining exposure in volatile digital asset markets. This cost is fundamentally tied to the interplay between supply and demand for leverage within a protocol.

Effectively managing these costs is critical for long-term profitability in high-frequency or high-leverage trading strategies. It acts as a mechanism to prevent permanent divergence between the derivative and its reference asset.