vibgg
Guides · 2 min
Funding rate APR: how to annualise a perpetual funding rate
Convert an hourly, four-hour or eight-hour funding rate into a comparable simple annualised rate—and understand why that number is a scenario, not a forecast.
Annualising funding puts contracts with different settlement intervals on one scale. It is useful for comparison, but dangerously easy to present as a return forecast. Funding rates reset; the annualised number assumes they do not.
What a typical rate annualises to
For scale: the median contract this site tracks currently annualises to 10.95%. That is the middle of 2276 live contracts, not a chosen example — and it is why the annualised figure is worth computing even though it is a scenario rather than a forecast.
The simple annualisation formula
simple APR = rate per settlement × settlements per year
For a contract settling every h hours:
settlements per year = 365 × 24 ÷ h
An eight-hour rate of 0.0100% has 1,095 scheduled periods in a 365-day year. Its simple annualised rate is therefore 10.95%:
0.0100% × 1,095 = 10.95%
Normalise the interval before comparing
A four-hour rate of 0.0060% annualises to 13.14%, while an eight-hour rate of 0.0100% annualises to 10.95%. The smaller displayed percentage is more expensive in the fixed-rate scenario because it is applied twice as often.
This is why sorting raw funding rates from different intervals can produce the wrong ranking. Convert them to an hourly, daily or annual basis first.
APR is not APY
Simple APR adds the payments. APY assumes receipts are reinvested and compound. For a directional perpetual position, compounding is usually the wrong default: funding may be paid, the rate can reverse, collateral changes and the position itself may be closed or liquidated.
For that reason vibgg shows an annualised rate as an extrapolation and uses simple multiplication for holding-cost scenarios. It does not claim that the current rate will persist for a year.
Use dollars alongside APR
APR describes intensity; dollars describe exposure. The same 10.95% simple annualised funding corresponds to very different cash flows on a $2,000 and a $200,000 position. It is also a different burden at 1x and 20x when measured against margin.
Check the annualised column in the funding comparison, then open a contract page to apply the rate to the notional, leverage and holding period you actually care about.