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Guides · 3 min read
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.
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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 is a typical funding rate APR right now?
For scale: across the 2,671 perpetual contracts on vibgg with a non-zero rate, the median currently annualises to 10.95%. That is the middle of today's live rates, not a chosen example, and it shows why the annualised figure is worth working out even though it assumes the rate never changes.
How to annualise a funding rate
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%
Convert to the same 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 the more expensive one, because it is charged 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.
Funding rate APR conversion table
The same rate per settlement gives a very different yearly figure depending on how often it is charged. Simple APR, 365 days:
| Rate per settlement | Every 8 hours | Every 4 hours | Every hour |
|---|---|---|---|
| 0.0050% | 5.48% | 10.95% | 43.80% |
| 0.0100% | 10.95% | 21.90% | 87.60% |
| 0.0300% | 32.85% | 65.70% | 262.80% |
| 0.1000% | 109.50% | 219.00% | 876.00% |
0.0100% every eight hours, and 0.0050% every four, is the default a large share of contracts sit at; the guide to the 0.01% funding rate explains where it comes from. A rate of 0.1000% is ten times that, and rarely lasts long.
Funding rate APR vs 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 annualised rates as simple APR, assuming today's rate stays the same, and uses simple multiplication for holding costs. It does not claim that the current rate will last for a year.
Annualise the average, not the latest rate
An APR built from one settlement is a snapshot. Annualising the average of the settled rates over 30 or 90 days gives a figure that has at least happened. The guide to funding rate history shows BTC's 7, 30 and 90-day averages side by side, and the gap between them is a quick measure of how far today's APR can be trusted.
The funding rate rankings rank widely traded contracts by their annualised rate, averaged across exchanges, and the funding fee calculator sets today's rate against the 30-day average in dollars.
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 rate table, then open a contract page to apply the rate to your own position size, leverage and holding period.