What Is a Funding Rate in Crypto?
The payment that keeps a perpetual futures price close to spot, who pays it, and what it costs to hold a position.
Calculate FundingA perpetual future is a contract with no expiry date. Without an expiry nothing forces its price to meet the spot price, so exchanges use a funding rate to pull it back. At fixed times, traders on one side of the market pay traders on the other side, and the direction of the payment pushes the contract price toward spot.
When the perpetual trades above spot, the funding rate is positive and longs pay shorts. When it trades below spot, the rate is negative and shorts pay longs. The payment is the position value multiplied by the rate. Exchanges differ in the formula, the interval and the caps, but many combine a premium component with an interest component, and the interval is often 8 hours. Check the contract page on your exchange for the exact rules.
The rate also says something about positioning. A high positive rate means many traders are long and paying to stay in the position. That is information about the crowd, not a signal about direction, because extreme rates can last a long time. Treat it as a cost and a context, not as a trade idea.
The cost accumulates. A position worth 10,000 that pays 0.03% every 8 hours for 7 days makes 21 payments of 3.00, which is 63.00 in total. For a trade held for hours this hardly matters. For a position held for weeks it can approach the trading fees, and with leverage it is a larger share of the margin.
Before you open a perpetual position, look at the current rate and the time of the next payment. The funding rate calculator turns a rate, an interval and a holding period into a cost, and the trading fee calculator covers the rest of the bill.
You pay in funding
21.00
Funding payments (21)
−1.00 each
Per day
−3.00
Of the position value
0.210%
Annualized, on the position
−11.0%
Assumes the rate stays the same. Real rates change at every funding time. On most perpetual contracts a positive rate means longs pay shorts. Where a sign is shown, a minus means money leaves your balance and a plus means it arrives.
This is what funding costs on paper. Your own trade history shows what fees and funding actually took, and where.
Analyze my tradesThe key points
Who pays and who receives
A positive rate means longs pay shorts, and a negative rate means shorts pay longs. On many exchanges the payment goes between traders rather than to the exchange, but confirm how yours works.
When it is charged
At fixed times, often every 8 hours. A position that is open at the funding time pays or receives it, so closing before it avoids that payment on most venues.
A cost and a context
Funding is a recurring cost of holding a position. It also shows how crowded one side is, which is context for a trade and not a prediction.
It changes
The rate is recalculated from market conditions and can change sign. Any cost estimate assumes today's rate stays, which is rarely true over weeks.
Frequently asked questions
Who receives the funding payment?
The traders on the opposite side of the payment. When the rate is positive, shorts receive what longs pay. On many exchanges the exchange itself does not keep it, but the rules differ, so check the documentation for your contract.
How often is funding paid?
Many perpetual contracts use an interval of 8 hours, which is three payments a day, but some use shorter intervals. The interval is shown on the contract page, together with the countdown to the next payment.
Can I avoid paying funding?
On most exchanges you pay only if the position is open at the moment of the funding time, so closing before it avoids that payment. You can also hold the side that receives funding, which carries the full price risk of the position.
Is a high funding rate a sign to trade against the crowd?
Not reliably. A crowded side can stay crowded and the rate can stay high for a long time while the price keeps moving the same way. Use it as one input and as a cost, not as a standalone signal.
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Holdy Lab content is educational and is not financial advice. Results describe the data you provide; they do not predict future results.