Funding rate: what it is in perpetual futures
If you’ve ever seen your futures balance drop slightly without closing anything, it was probably the funding rate. It’s the mechanism that keeps the price of perpetual futures tied to spot, and it is paid or received by whoever holds an open position.
By Bárbara Ruiz·Updated ·3 min read
Why it exists
A perpetual never expires, so it needs something to keep it tied to the real price: that something is funding. When the perpetual trades above spot (there’s more appetite for being long), longs pay shorts; that makes opening a long more expensive and opening a short more attractive, and the price moves back towards spot.
Who pays whom
With a positive rate, longs pay shorts; with a negative rate, shorts pay longs. The payment is calculated on the position size and is made every few hours, only if you have the position open at that moment.
| Rate | What it usually signals | Longs | Shorts |
|---|---|---|---|
| Positive | More buying pressure on the perpetual | Pay | Receive |
| Negative | More selling pressure | Receive | Pay |
The exchange doesn’t keep that money: it passes from some traders to others.
What it costs you, in numbers
The maths is position size × rate. On many contracts, in calm markets, the rate is around 0.01% per period. With a 10,000 USDT long position:
| Rate per period | Each period | Per day (3 periods of 8 h) | Over 30 days |
|---|---|---|---|
| 0.01% | 1 USDT | 3 USDT | 90 USDT |
| 0.05% | 5 USDT | 15 USDT | 450 USDT |
| 0.10% | 10 USDT | 30 USDT | 900 USDT |
If you opened that 10,000 USDT position with 1,000 of margin at x10, at a rate of 0.05% you lose almost half your margin in a month from funding alone, even if the price doesn’t move. In moments of euphoria the rate can go beyond those values.
When it’s charged
Each contract has fixed funding settlement times, and the exchange shows the predicted rate and the countdown to the next payment on the contract screen. You only pay or receive if your position is open at exactly that moment. Some contracts settle every 8 hours, others every 4 hours or every hour: check yours.
What it says about the market
A very positive rate for days on end means that many traders are long with leverage. It doesn’t say where the price will go, but it does say that, if it falls, there will be many long positions close to their liquidation, and cascading liquidations speed up drops. It’s context, not a signal to enter.
Frequently asked questions
Is the funding rate charged by the exchange?
No. It’s a payment between those holding open positions: longs pay shorts or the other way round, depending on the sign of the rate.
How often is funding paid?
It depends on the contract. On many perpetuals it’s every 8 hours, but some settle every 4 hours or every hour. You can see it on the contract screen.
How can you avoid paying funding?
It’s only charged to whoever has the position open at the settlement time. If you close before then, you neither pay nor receive for that period. It doesn’t exist on spot.