What is a funding rate?
A funding rate is a periodic payment between long and short perpetual-futures positions. It helps keep the perpetual price near its reference market, but the formula, interval, cap, and settlement rules vary by venue and contract.
Why perpetual contracts need funding
Dated futures converge toward spot as expiry approaches. Perpetual contracts have no expiry, so venues use funding payments to discourage persistent price gaps.
A positive rate normally means longs pay shorts; a negative rate normally reverses that flow. Funding describes the cost imbalance between long and short positions.
How to compare rates correctly
Funding payment is generally position notional multiplied by the rate for that settlement period. Eligibility and calculation details must be checked against the venue's current contract rules.
Preserve the native interval and distinguish a forecast from settled funding. Scaling a short-period quote to a longer window assumes unchanged future rates; realized receipts must be summed settlement by settlement.
Frequently asked questions
Does a high positive rate mean price must fall?⌄
It can indicate crowded long positioning. Assess persistence alongside open interest, basis and market depth.
Are all contracts funded every eight hours?⌄
No. Intervals may be one, four, or eight hours and can change. Check the current contract specification.
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