What is funding rate?
Definition
The funding rate is a periodic payment between long and short holders of a perpetual futures contract that keeps its price anchored to spot.
When the contract trades above spot, the funding rate is positive and longs pay shorts. When it trades below, shorts pay longs. Payments usually happen every eight hours.
Persistently high positive funding often signals crowded, leveraged long positioning. Traders watch it as one input to a thesis, not as a signal on its own.
Funding is also a cost of holding: a long position paying high funding for weeks can lose money even if price goes nowhere.
Related terms
General education only. Not financial advice.