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What is Funding Rate?
The funding rate is a periodic payment between long and short traders in perpetual swaps. It keeps the perpetual price aligned with the spot price.
Full Explanation
Funding rates are exchanged every 8 hours between long and short positions on perpetual swap markets. Positive funding = longs pay shorts (market is bullish/overleveraged long). Negative funding = shorts pay longs (market is bearish/overleveraged short). Traders monitor funding rates to gauge market sentiment and find funding rate arbitrage opportunities. Extremely high positive funding often precedes crashes as overleveraged longs get liquidated.
Related Terms
Last updated: 2026-03-21
