What is a funding rate?
Perpetual futures have no expiry date, so exchanges use funding payments to keep the contract price close to the spot price. At fixed times, usually every 8 hours, traders on one side of the market pay traders on the other side.
- Positive funding rate: longs pay shorts. This usually happens when the perpetual trades above spot and the market is crowded with longs.
- Negative funding rate: shorts pay longs. This usually happens when the perpetual trades below spot.
The exchange does not keep the funding payment; it moves between traders. You only pay or receive funding if you hold a position at the funding timestamp.
Funding fee formula
Funding fee = Position notional × Funding rate % ÷ 100 × Number of intervals
Position notional = quantity × mark price. A positive result means longs pay that amount and shorts receive it. A negative result means shorts pay and longs receive.
With 8-hour funding there are 3 intervals per day and about 90 per 30-day month. Some exchanges and some contracts use 1-hour or 4-hour intervals instead, so check the contract details.
Worked example
You hold a long position with a notional value of 50,000 USDT. The funding rate is +0.01% per 8 hours.
- Per interval: 50,000 × 0.01 ÷ 100 = 5 USDT
- Per day (3 intervals): 50,000 × 0.01% × 3 = 15 USDT
- Per 30 days (90 intervals): 50,000 × 0.01% × 90 = 450 USDT
Because the rate is positive, you as the long pay these amounts. A trader short 50,000 USDT would receive them.
Funding can rise sharply in strong trends. At +0.03% per interval, a 30,000 USDT long held for one week (21 intervals) pays 30,000 × 0.03% × 21 = 189 USDT.
Negative rate example: a 20,000 USDT position with a rate of −0.005% over 6 intervals (two days) gives 20,000 × −0.005% × 6 = −6 USDT. Shorts pay 6 USDT and longs receive it.
Why funding matters
A rate of 0.01% sounds tiny, but it is charged on the full notional, not your margin. On a 10x position, 0.01% three times a day is 0.3% of your margin every day, or around 9% of margin over a month, before any price move. Over long holds, funding can turn a small winning trade into a loss.
Funding can also work in your favour. Delta-neutral traders hold spot and an opposite perpetual position to collect funding while staying flat on price. That strategy has its own risks, including rate flips, exchange risk and liquidation on the futures leg.
How to use this calculator
- Enter your position notional in USDT (quantity × price), or quantity and price.
- Enter the funding rate per interval in percent, including the sign (for example 0.01 or −0.005).
- Enter the number of intervals you expect to hold through, or the number of days with the interval length.
- Choose long or short to see whether you pay or receive.
- Read the funding per interval, per day and for the full holding period.
Tips
- Funding rates change every interval. The predicted rate shown on the exchange is an estimate for the next payment only.
- You only pay funding if you are in a position at the timestamp. Closing a few minutes before avoids that payment, though spreads and fees may cost more than you save.
- Include funding in your trade plan: the crypto futures PnL calculator shows the result before funding, so subtract or add your funding estimate.
- On isolated margin, funding paid is taken from the position margin, which moves your liquidation price. Re-check it with the liquidation price calculator on long holds.
FAQ
Who pays when the funding rate is positive?
Longs pay shorts. When the rate is negative, shorts pay longs.
How often is funding paid?
Most major perpetual contracts pay every 8 hours, which is three times a day. Some exchanges or contracts use hourly or 4-hourly funding.
Is funding based on my margin or my position size?
On your position size (notional value). Leverage does not reduce funding; it only reduces the margin you post, which makes funding a bigger share of that margin.
What is a normal funding rate?
Many exchanges use 0.01% per 8 hours as a baseline when the market is balanced. In strong rallies or sell-offs, rates can move well above or below that.
Do spot traders pay funding?
No. Funding only applies to perpetual futures positions. Spot holdings and dated futures do not pay funding.
Final note
Funding is a holding cost (or income) that grows with time and position size. Estimate it before you plan a multi-day perpetual trade so it does not surprise you.
Trading leveraged products carries a high risk of loss. Results are estimates; check your broker's contract specifications.