STRATEGIES
Funding Rate (Perpetual Funding Rate)
Definition
The funding rate is a periodic payment between long and short traders in perpetual futures markets to keep the contract price aligned with the spot price of the underlying asset.
Example
Example
If ETH perpetuals trade above spot price, long positions pay short positions a funding fee every 8 hours to incentivize price convergence.
Risks to Consider
Risks
- Funding costs
- Rate volatility
- Timing risk
- Strategy impact