What funding is
To keep a perpetual contract's price near spot, longs and shorts periodically pay each other. A positive funding rate means longs pay shorts; a negative one means shorts pay longs. Settlement is usually every 8 hours but varies by venue and contract.
Formulas
- Per payment = notional × funding rate
- Total = per payment × payments per day × days held
- Annualized = funding rate × payments per day × 365
- Vs. margin = total ÷ margin (higher leverage makes the share of margin larger)
Example: 10,000 notional, 0.01% rate, three payments a day for 30 days costs 90 (about 10.95% annualized).
Reading it
Funding moves with market heat. A rate that persists eats into a directional bet — or pays you like interest on the other side. Rates keep changing, so this is a simple calculation assuming the entered rate holds.
FAQ
Who receives the funding?
The traders on the opposite side, not the exchange, which only intermediates.
Do shorts always get paid?
Only when the rate is positive. If it is negative, shorts pay.
What if I close before settlement?
Funding accrues only if the position is open at the settlement time.
Does higher leverage mean higher funding?
Notional drives the amount; as a share of margin it scales with the leverage multiple.