Eli5 when trading with leverage, what does the lender get out of it?

Question

I have been looking at crypto leverage trading. Let’s say I put in $50 at 5x leverage and I take profits at 100% gains. Do I get the full $250?

I’m confused about what the exchange gets out of it, is it a percentage, an amount when you make the trade, or nothing at all?

I’m using of Phemex exchange

In: Other

Answer 1

When you trade with leverage, someone is lending you money. In your example, you put up $50, someone lends you $200, and you use that to buy $250 worth of stuff. The lender charges you interest on the loan. If they were charging 6% annual interest, and you held the crypto for 30 days before selling it, then the interest you would pay would come out to about $1.