# Funding rate

> A funding rate is a periodic payment exchanged between the long and short holders of a perpetual futures contract, which keeps the contract price tethered to spot. A positive rate means longs pay shorts. It is quoted per interval — usually every eight hours — which makes it look trivial: 0.01% per interval is 0.03% a day, but 10.95% annualised, comparable to the entire expected return of many systematic strategies.

Canonical HTML page: https://qanterion.com/glossary/funding-rate
Updated: 2026-08-18
Also known as: perpetual funding, funding fee

## How it is calculated

```
Payment    = Position notional × Funding rate
Annualised = Funding rate × Intervals per day × 365

Positive rate: longs pay shorts.   Negative rate: shorts pay longs.
Charged only on positions open at the settlement timestamp.
```

## Worked example

$10,000 notional at 0.01% every 8 hours for 30 days → $90, regardless of price movement.

## It is charged on notional, not on margin

Funding scales with position size, not with capital committed, so a 10× leveraged position pays ten times the funding of an unleveraged one backed by the same margin. Any leveraged carry strategy therefore has to clear a much larger hurdle than its unleveraged equivalent before the price has moved at all.

## Funding is a crowding signal

Persistently positive funding means the market is paying to stay long — information about positioning rather than about price. Extended periods of elevated positive funding often precede long-side liquidation cascades, because the leverage paying the funding is the same leverage that gets force-closed when price turns.

## How it gets misread

Funding is often ignored on the grounds that a single payment is negligible. It is charged three times a day and independently of whether the trade is working, so on any position held for weeks it is a fixed cost that has to be subtracted from expectancy before the strategy is evaluated.

## Calculate it

- Funding Rate Calculator: https://qanterion.com/tools/funding-rate-calculator
- Crypto PnL Calculator: https://qanterion.com/tools/crypto-pnl-calculator

## See also

- Maker and taker fees: https://qanterion.com/glossary/maker-taker-fees
- Liquidation: https://qanterion.com/glossary/liquidation
- Slippage: https://qanterion.com/glossary/slippage

## Sources

- [BIS Working Papers No 1087: Crypto carry](https://www.bis.org/publ/work1087.pdf) — Bank for International Settlements
- [Fundamentals of Perpetual Futures](https://arxiv.org/abs/2212.06888) — Songrun He, Asaf Manela, Omri Ross and Victor von Wachter (arXiv:2212.06888)
- [Introduction to Funding Rate](https://www.bybit.com/en/help-center/article/Introduction-to-Funding-Rate) — Bybit

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## Risk notice

Definitions are educational. Nothing here is investment advice, and no metric described on this page predicts future results.