What Is Funding Rate in Crypto Futures?
If you trade perpetual futures, you've seen a small number called the funding rate tick up and down. It quietly moves money in and out of your account every few hours. Here's what it is and why it matters.
Why funding rates exist
A perpetual future never expires, so there's nothing forcing its price to match the real (spot) price. The funding rate is the mechanism that keeps them close. It's a small periodic payment exchanged between traders — not paid to the exchange — that nudges the perpetual price back toward spot.
Who pays whom?
- Positive funding (perp trading above spot): longs pay shorts. Too many people are long, so longs are charged to discourage it.
- Negative funding (perp below spot): shorts pay longs.
Most exchanges settle funding every 8 hours. Some use 4-hour or 1-hour windows when markets are volatile.
How it affects your PnL
Funding is charged on your position size, not your margin — so with leverage it adds up faster than it looks. Hold a large, leveraged long through several positive-funding periods and the cost can quietly erode your profit. For short-term trades it's usually tiny; for multi-day holds it deserves attention.
Funding aside, get your liquidation, PnL and position size right first.
Open the PnL calculator →A simple example
Say funding is +0.01% and you hold a $10,000 long position. At settlement you pay $1 to the shorts. Small once — but over many 8-hour periods on a big position, it compounds. Note: our calculators show price-based PnL and don't include funding or fees, so treat them as the pre-cost picture.
FAQ
Is funding rate a fee?
Not exactly — it's a payment between traders, not to the exchange. But it functions like a cost (or rebate) on your position.
Can I earn from funding?
Yes. If you're on the side that receives funding (e.g. short during positive funding), you're paid each period — the basis of "funding farming" / delta-neutral strategies.