What is a funding fee in crypto futures?

Why perpetual contracts need funding

A perpetual future never expires, so nothing forces its price to converge with the spot price the way a delivery date does for traditional futures. Funding is the mechanism that does the job instead:

• When the perpetual trades above spot, the funding rate is positive — longs pay shorts, which pressures the premium down
• When it trades below spot, the rate is negative — shorts pay longs, pulling the discount up

The payment is calculated on your notional position size and settles automatically at each funding interval while your position is open. Close before the timestamp and you neither pay nor receive that round.

Funding fee vs trading fee

The two get confused because both show up as costs on a futures position, but they are different animals:

• A trading fee is charged by the exchange on each order you execute — see current futures fee rates
• A funding fee flows between traders; the exchange only relays it
• Trading fees are always a cost; funding can be income when you hold the receiving side

That difference matters for rebates: a fee rebate returns a share of trading fees, because that is the money the exchange actually collects and pays commission on. Funding payments are not exchange revenue, so no rebate program covers them — any service claiming to rebate funding is describing something else.

Managing funding costs honestly

Funding is a market price, not a fixed charge, so the only real levers are position timing and direction: know the current rate before holding through a funding timestamp, and remember that persistent extreme rates tend to mean a crowded trade. What you can systematically reduce is the trading-fee side of your costs — four methods that stack, including the 50–67% rebate loweef pays daily on partner exchanges.

Quick definitions in the glossary: funding fee · funding rate · funding interval.