Funding rate
The funding rate is the percentage applied to your position's notional at each funding interval, determining who pays whom and how much between longs and shorts on a perpetual contract.
The rate is computed by the exchange from the gap between the perpetual's trading price and the underlying index (the premium), usually plus a small fixed interest component, and often clamped within a band. When perpetuals trade rich to the index — the common state in bullish markets — the rate is positive and longs pay shorts; when they trade at a discount, it flips.
Magnitudes look tiny and compound meaningfully. A rate of 0.01% per 8-hour interval is roughly 0.03% per day — about 11% annualized on notional — and elevated markets can sustain multiples of that. Leveraged positions feel it in proportion to their full notional, not their margin.
Every derivatives venue publishes current and predicted rates per contract. For position planning, the practical habits are checking the predicted rate before holding through a funding timestamp, and remembering that funding is trader-to-trader flow: your rebate recovers trading fees, while funding management is its own discipline.