Perpetual Futures Funding Rates Explained
Funding is a periodic payment mechanism used by many perpetual futures markets. It helps align a contract's price with its reference market and can change the economics of holding a position.
Why funding exists
A perpetual contract has no conventional expiry to force convergence with a spot or reference price. Funding payments are one mechanism used to encourage the perpetual price to remain close to the underlying reference.
Who pays funding?
Depending on the funding rate and the contract's rules, longs may pay shorts or shorts may pay longs. A positive or negative rate does not guarantee a future payment direction; rates can change.
How funding affects a position
Funding can add to or subtract from the cost of holding a position. The impact depends on position size, rate, interval and direction. Funding is separate from trading fees and realized price gains or losses.
What to check
Read the live funding rate, next funding timestamp, calculation method, payment interval and any caps or special rules shown for the specific contract. Do not assume all markets use the same schedule.
Related guides
Frequently Asked Questions
Is funding the same as a trading fee?
No. Trading fees are charged for executing orders; funding is a payment mechanism between positions under the perpetual contract's rules.
Do longs always pay shorts?
No. Payment direction depends on the funding rate and the contract's calculation rules.
Can funding rates change?
Yes. Funding rates can vary with market conditions and may change between funding intervals.
Does funding guarantee price convergence?
No. Funding is one mechanism intended to encourage alignment; it does not eliminate basis risk or guarantee that contract and reference prices match perfectly.
Where can I see the funding rate?
Check the specific market's live trading interface and contract details. The rate, interval and next payment time can differ by market.