GlossaryAdvanced
Funding Rate
A periodic payment between long and short traders that keeps a perpetual contract's price near spot.
The funding rate is a periodic payment exchanged directly between long and short holders of a perpetual swap, designed to keep the contract's price closely aligned with the underlying asset's actual spot price.
A positive funding rate generally means long position holders pay short holders, and vice versa for a negative rate, incentivizing the contract's price back toward the spot price.
Examples
- A consistently positive funding rate can indicate more traders are positioned long than short.
- Funding payments are exchanged directly between traders, not paid by the exchange itself.