Derivatives & Risk

What is the funding rate in perpetual futures?

The funding rate is a periodic payment exchanged between long and short traders in perpetual futures to keep the contract price aligned with the underlying spot price. When the rate is positive, longs pay shorts; when negative, shorts pay longs, usually every eight hours. For example, holding a long position through several positive-funding periods steadily erodes your balance even if the price has not moved. Funding is a recurring cost of holding leveraged positions, and over time it can meaningfully affect the economics of a trade.

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