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What Is a Funding Rate in Perpetual Futures?
Funding rates keep perpetual futures close to the spot price. Learn who pays whom and why it matters.
Why funding exists
Perpetual futures have no expiry, so something must keep their price close to the underlying spot price. Funding payments between traders do that job.
Who pays whom
When the futures price is above spot, long traders usually pay shorts. When it is below spot, shorts usually pay longs. The exchange itself does not collect this payment.
How often
Funding is typically calculated and exchanged at fixed intervals, for example every eight hours, and the rate can change from period to period.
What to watch
Holding a position for a long time can cost a lot in funding when rates are high. Check the current rate and the next payment time before opening a position.
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Educational content only, not financial advice. Crypto assets carry a high risk of loss.
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