In: Glossary
Funding rate
A periodic payment between longs and shorts that keeps a perp near spot.
The funding rate is a small recurring payment exchanged between long and short traders to keep a perpetual's price aligned with the underlying spot price.
When more traders are long, longs pay shorts, which nudges the price back toward spot; when shorts dominate, shorts pay longs. It can quietly work for or against your position depending on which side is crowded.
Funding often matters more than the headline trading fee for anyone holding a position more than a few hours. Compare current funding on the rankings.