What Is the Funding Rate in Crypto Futures?

Open a perpetual futures position and you meet a cost most beginners have never heard of: the funding rate. It is small, it is easy to miss, and over a held position it adds up. Here is what it is and why you should care.

Perpetual contracts never expire, so exchanges use the funding rate to keep the contract price glued to the real spot price. Every few hours, one side pays the other. When perps trade above spot, traders who are long pay traders who are short. When perps trade below spot, shorts pay longs. The exchange does not keep it, it flows between traders, and it is the mechanism that stops the two prices drifting apart.

If you are on the side that pays, funding is a straight cost, charged on your whole position size, not just your margin. Hold a large, leveraged position for days through a high positive rate and it can quietly become a meaningful drag on your returns. If you are on the side that receives, it is a small tailwind. Either way, check the current rate before you hold a position overnight.

For a quick trade, funding barely matters. For anything you plan to hold, it does. Some traders even build strategies around collecting it, but for most people the point is simpler: know it exists, check it before committing to a long hold, and factor it into whether a trade is really worth keeping open. Compare perp fees across exchanges on our leaderboard.