Funding Rate
Glossary · Derivatives
The funding rate is a periodic payment between long and short traders on perpetual futures that keeps the contract's price pinned to spot. When the rate is positive, longs pay shorts; when negative, shorts pay longs. Pairs settle every 8, 4 or 1 hours, and most Binance USDT perps now settle every 4.
"It's the rent one side of the trade pays the other — when everyone's long, longs pay, and the rent tells you which side is crowded."
Funding is quoted per interval — 0.01% per 8 hours is the neutral baseline on most exchanges, about 11% a year. The rate moves with the gap between the perp's price and spot: perp trades rich, funding goes positive and longs pay; perp trades cheap, shorts pay. Binance's default interval is 8 hours, but plenty of pairs — especially newer listings — fund every 4 hours or hourly, so check the interval before comparing rates. A 0.1% rate means very different things at 8h (0.3% a day) versus 1h (2.4% a day).
Extreme funding is a crowding gauge, not a direction call. When a coin prints 0.3%+ per interval, longs are paying serious rent and the squeeze fuel is loaded — those are the moves where a 5% dip liquidates a week of gains. The classic retail mistake is joining the crowded side because the chart looks strong; the funding table is telling you the trade is full. It cuts the other way too: deeply negative funding into support is often the spot where shorts pay you to hold. Read funding next to open interest — high funding plus rising OI is the trap arming itself.
Related jargon
Questions
- What is Funding Rate in crypto trading?
- The funding rate is a periodic payment between long and short traders on perpetual futures that keeps the contract's price pinned to spot. When the rate is positive, longs pay shorts; when negative, shorts pay longs. Pairs settle every 8, 4 or 1 hours, and most Binance USDT perps now settle every 4.
- How would a trader say it?
- It's the rent one side of the trade pays the other — when everyone's long, longs pay, and the rent tells you which side is crowded.
Part of the Crypto Jargon glossary — every term, decoded the way a trader would say it.
Crypto Jargon
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