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What Is Funding Rate in Perpetual Futures?

The funding rate is a periodic payment exchanged between long and short traders in perpetual futures markets. Because perps have no expiration date, funding rates keep the contract price aligned with the underlying spot price.

How It Works​

  • Positive funding rate: The perp trades above spot. Longs pay shorts, discouraging excess buying pressure.
  • Negative funding rate: The perp trades below spot. Shorts pay longs, discouraging excess selling pressure.

Payment Schedule​

Funding is exchanged every 8 hours — typically at 00:00, 08:00, and 16:00 UTC. The payment amount is:

Funding Payment = Position Size × Funding Rate

You only pay or receive funding if you hold a position at the exact settlement time.

Why It Matters​

Funding costs accumulate over time and directly affect your PnL. High positive funding eats into long profits; high negative funding penalizes shorts. Extreme rates can also signal crowded positioning and potential reversals.

To estimate how much funding will cost on a specific position, use the funding rate calculator.

For a complete breakdown — including calculation formulas, strategies, cross-market differences, and worked examples — see our Funding Rate Guide.

  • Basis — the perp-spot price gap that drives the funding rate
  • Carry Trade — using funding rate income as a yield strategy
  • Delta Neutral — the structure used to collect funding without directional risk
  • Unrealized PnL — funding costs eat into open position PnL over time