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Guides · 4 min
What is a funding rate, and what does it actually cost you?
Perpetual futures have no expiry, so funding is the mechanism that keeps them tracking spot. Here is how the payment works, who pays whom, and what it costs in dollars.
A perpetual futures contract never expires. That is the whole appeal — and it creates a problem the exchange has to solve. A contract with a settlement date is dragged toward the spot price by arbitrage as expiry approaches. A contract with no expiry has no such anchor, so its price can drift away from the underlying and stay there.
Funding is the fix. At scheduled intervals, eligible open positions pay or receive a small percentage of notional value, normally between long and short holders rather than as trading commission retained by the venue. The exact deduction method depends on the exchange and margin mode.
Who pays whom
The sign of the funding rate decides the direction:
- Positive rate — the perpetual is trading above spot. Longs pay shorts. This is the common case in a market where most people want leveraged upside.
- Negative rate — the perpetual is trading below spot. Shorts pay longs. A long position is being paid to stay open.
The economic logic is simple: whichever side is crowded pays the other side to take the opposite risk. That payment is what pulls the contract's price back toward spot.
How the payment is calculated
Funding is charged on notional value, not on your margin:
payment = position notional × funding rate
Two consequences follow, and both are routinely missed.
Leverage multiplies the pain. A $10,000 position pays the same funding whether you posted $10,000 of margin or $1,000. But at 10x, that payment is ten times larger as a share of the capital you actually put up. This is why funding matters far more to a leveraged trader than the headline percentage suggests.
Only positions included at settlement pay. Funding is charged at discrete moments. Eight hours is common, but one-, two- and four-hour schedules also exist, and some venues shorten the interval when a rate reaches its cap or floor. Check the contract's current interval instead of assuming three payments per day.
Why the percentage is misleading
A funding rate of 0.0100% looks like nothing. It is not nothing.
At an eight-hour interval, that rate is applied three times a day, 1,095 times a year. If the rate somehow remained unchanged, the simple annualised figure would be roughly 11% of notional. It is a scenario, not a forecast: funding resets and can change sign at every settlement.
Now apply leverage. At 10x, the same rate consumes about 110% of your posted margin over a year, or roughly 9% of it per month. A position can be directionally correct and still be ground down by carry.
This is why every rate on this site is also shown as a dollar figure and as a share of margin. The percentage is the input; the money is the thing you can act on. The funding table shows both across every venue, and each contract page lets you enter your own position size, leverage and holding period.
Rates differ between exchanges — and that is exploitable
Funding is set per venue, from that venue's own order book. The same contract can carry a materially different rate on two exchanges at the same moment, and occasionally the sign differs: a position that costs money on one venue earns money on another.
Two practical uses follow. If you are going to hold a directional position for days, opening it where the funding is cheapest is free money relative to opening it anywhere else. And if the gap is wide enough, a delta-neutral position — long on the venue paying, short on the venue charging — collects the difference, with the usual caveats about margin, liquidation and execution cost on both legs.
None of that is a recommendation to trade. It is an explanation of what the number is and what it costs.
What to check before holding a position
- The current rate and its sign — are you paying or being paid?
- The settlement interval — eight hours and four hours are both common, and a four-hour cycle charges twice as often.
- Recent history — a single elevated print is noise; the same sign for a week is a persistent carry cost.
- The cross-venue spread — if one exchange is materially cheaper, that difference compounds every settlement.
The funding pages show all four for every contract listed on more than one of the venues tracked here. For total cost including trading fees and spread, the cost calculator puts them together.
Sources and scope
The mechanism and examples were checked on 3 September 2026. Settlement intervals, caps and formulas can change by contract, so the contract specification and next-funding timestamp remain authoritative.