Funding rate explained: what it is and how to read it
Funding is the payment long and short holders exchange with each other so that a perpetual future's price does not drift away from spot.
A regular future has an expiry date, and its price converges with the underlying asset by itself. A perpetual future has no such date — so another mechanism was needed to keep it near spot. That mechanism is funding: every few hours one side pays the other.
Who pays whom
The sign tells the whole story. Positive funding means longs pay shorts: the market is crowded on the buy side. Negative means shorts pay longs: sellers are in the majority.
- 0.01% per period is the calm-market default, and the same value most exchanges use as their baseline.
- 0.05% and above is a real imbalance — longs are paying four to five times the usual.
- Negative rates are rare in a rising market and common right after a sharp drop.
Why raw percentages are not comparable
Exchanges settle on different schedules: most every eight hours, some every four, and for certain coins as often as hourly. The same «0.05%» means different money in each case. That is why the annualised rate is more useful — it puts everything on one scale.
How traders use it
High positive funding is the cost of holding a long. If it persists, longs pay for every hour of waiting, and in a sideways market that adds up. A sharp flip to negative after a sell-off often marks the point where the market is oversold.
- The spread between exchanges is the basis of a neutral trade: long where you get paid, short where you pay.
- An extreme rate is not a reversal signal by itself — it can hold for days.
- Funding tells you about crowd positioning, not about direction.
Where funding is extreme right now
| Coin | Value | Details |
|---|---|---|
| BICO | -0.4600% | -504% annualised |
| TST | -0.2746% | -301% annualised |
| ERA | -0.2617% | -287% annualised |
| KMNO | -0.1989% | -218% annualised |
| ACE | -0.1843% | -202% annualised |
| LA | -0.1552% | -170% annualised |
| BZ | -0.1204% | -132% annualised |
| QNTX | -0.1188% | -130% annualised |
Live data from nine exchanges. The annualised rate assumes the usual schedule of three payments a day; where an exchange settles more often, the real figure is higher.
Frequently asked questions
How often is funding paid?
Most often every eight hours — at 00:00, 08:00 and 16:00 UTC. Some exchanges moved to four hours, and for individual coins the interval can be cut to one hour when the imbalance is severe.
What does negative funding mean?
That shorts are paying longs: there are more sellers than buyers. It usually happens after a sharp decline.
Is funding paid on spot markets?
No. Funding exists only on perpetual futures — it is what keeps their price anchored to spot.
Can you earn from funding alone?
Yes — that is delta-neutral carry: buy spot and short an equal size of the perpetual. The rate is your income, fees eat into it, and the risk moves to prices diverging between venues.