Why is AAVE perp funding still positive on BYDFi after the DeFi selloff?

[Current events - Fed week, AAVE perp]

AAVE fell 3.6% on Tuesday as DeFi tokens gave back Monday's gains and the CoinDesk DeFi index slid 1.8%, while Bitcoin slipped under 80,000 on the first day of the Fed's two-day meeting. Funding is the periodic payment between longs and shorts that keeps a perp near spot. On BYDFi's AAVE perp it stayed positive through the drop, so longs are still the side paying.

Context. CoinDesk also reported that Aave's DAO has not bought back tokens since April. Across majors, BTC, ETH and SOL open interest rose while prices fell, and funding stayed positive. ZEC added 0.5%. The Fed decision lands Wednesday with FedWatch odds near 90% for no change, so any surprise in the statement or press conference hits a market that is adding leverage, not cutting it.

The image is BYDFi's live AAVEUSDT perpetual page at about 4:20 PM ET: last 132.38, 24h change -0.21%, index 132.45, fair price 132.38, funding +0.0096% with the 8:00 PM ET countdown, 24h high 136.19, low 129.42, 24h volume 24.635K AAVE, turnover 3.256M and open interest 2.363M USDT.

Five steps to read the AAVE perp this week:

1. Range first. 136.19 high to 129.42 low is about 5.23% of the low. Altcoins tend to swing harder than BTC around macro events. The 7-day change on BYDFi's API is about -12.9%.

1. Then funding. The API showed 0.0094% at 4:20 PM ET and the UI showed +0.0096% a moment earlier, per 8h, capped at +/-2%. Positive after a selloff means dip-buyers are using leverage and paying for it.

1. Then open interest. 1,784,730 contracts x 0.01 AAVE = about 17,847 AAVE, about 2.36M USDT at the fair price. That is small next to major-coin books, so a few large liquidations can move price further.

1. Then your liquidation. Worked example: 10 AAVE long = 1,000 contracts = 1,323.80 USDT at fair 132.38. Rough isolated liquidation with BYDFi's 0.665% maintenance rate is entry x (1 - 1/leverage + 0.665%). 20x is about 126.64 and 50x is about 130.61. Fair to the 24h low is 2.96, about 2.24%, so 50x would not survive a repeat of today's low. Max leverage on this contract is 75x.

1. Then costs. Taker 0.06% each way is about 1.59 USDT round trip on that 10 AAVE. Maker is 0.02%. Funding at 0.0096% is about 0.13 USDT per settlement, at 8:00 PM, 4:00 AM and 12:00 PM ET.

Try it: take your planned AAVE size and leverage, run the step 4 formula, and compare your liquidation price with 129.42 and 136.19. If either sits inside your liquidation band, the size is too big for Fed week.

Common mistakes

• Reading positive funding after a drop as a sign the bottom is in. It mostly means longs are still crowded.
• Opening a long without checking how many settlements you'll hold through, and what that funding costs on the full position value.
• Ignoring the gap between mark and index price, which shows how far the perp has drifted.
• Holding high leverage into the Fed decision, when moves can be sharp in both directions.
• Assuming funding will flip negative soon. It can stay positive for a long time if dip buyers keep arriving.

FAQ

Who pays when AAVE funding is positive? Longs pay shorts at each settlement.

Why hasn't funding turned negative after a selloff? Traders keep buying the dip with leverage, so longs remain the crowded side.

Should I short because funding is positive? Not on that alone. You'd collect funding, but a squeeze can cost far more.

Where do I see the next payment? The contract panel shows the current rate and the countdown to settlement.

How do I size around the event? Start from your stop distance and the loss you can accept, then pick size. Leverage comes last.

What to watch next

Track the funding rate over the next few settlements and whether open interest keeps rising. A falling rate with falling open interest usually means longs are leaving.