Funding rates are a mechanism used by many perpetual futures venues to help keep contract prices aligned with a reference market. The calculation and schedule vary by exchange.
How funding works
Depending on the venue and funding rate, long or short positions may pay the other side at scheduled intervals. Funding is not the same as a trading fee and should be checked against the specific contract documentation.
Why funding changes
Funding can reflect differences between the perpetual contract and its reference price, as well as venue-specific formulas and market conditions. It can move quickly when positioning or volatility changes.
How to use the metric
Funding is one contextual input, not a standalone trading signal. Review open interest, liquidity, basis, volatility and your own exposure. Historical funding does not guarantee future rates.
Disclaimer: This article is for general education and informational purposes only. It is not investment, legal or tax advice. Crypto assets and derivatives involve substantial risk.