Crypto funding rates determine payments between traders with long and short perpetual futures positions. Positive funding means longs pay shorts; negative funding means shorts pay longs. The payment depends on position value, the applicable rate, and the settlement rules.
Use the live tools
This guide explains how to read a rate and estimate a holding cost. It also separates funding observations from price forecasts. Start with the funding rates tool to compare the available observations and their timestamps.
Key takeaways
- A funding percentage needs an interval, such as one hour or eight hours.
- Funding usually applies to the full position value, rather than only its margin.
- A displayed estimate can change before settlement.
- An annualized rate is a calculation under fixed assumptions, not a promised return.
Why perpetual futures use funding
A perpetual futures contract has no fixed expiry date. Its price can differ from the price for immediate purchase of the asset. That immediate purchase price is the spot price.
The sign tells you who pays
The latest price gap alone does not determine the final funding rate.
Funding changes the cost of holding each side. A payment to shorts can encourage selling of the contract. A payment to longs can encourage buying. These incentives help prices stay close, but they do not guarantee equal prices. The dYdX funding documentation describes this purpose and its hourly payment process.
A positive rate does not mean there are more open long contracts than short contracts in a matched market. Each open contract has both sides. The rate reflects the venue formula and market prices, rather than a count of bullish traders.
Read the rate, interval, and price basis together
A funding quote needs more context than its percentage. Check the contract specification for its asset, settlement currency, and market. The interval tells you how often the quoted payment applies. The timestamp tells you when the venue observed or settled the rate.
| Field | What to check | Why it matters |
|---|---|---|
| Rate | Positive, negative, or zero | Determines which side pays |
| Interval | One hour, eight hours, or another period | Makes rates comparable |
| Rate status | Estimated or settled | Separates a forecast from an actual payment |
| Position value | Quantity and the venue pricing rule | Sets the payment amount |
| Settlement time | Contract schedule and time zone | Determines which open positions participate |
The same symbol can identify different contracts on two venues. A dollar comparison also needs a common currency. A USDT payment and a USDC payment require a conversion assumption when you express both in dollars.
Calculate one funding payment
For a contract with dollar-based position value, the basic calculation is:
Funding amount = position value × funding rate.
Convert the percentage to a decimal before multiplication. A rate of 0.01% equals 0.0001. The direction of the position determines whether the amount is a payment or a receipt.
Hypothetical example: a $20,000 position faces a settled rate of +0.01%. The amount is $20,000 × 0.0001 = $2. A long pays $2; an equal short receives $2. With $2,000 of margin, the payment equals 0.1% of that margin.
The pricing input can differ across venues. Bybit uses mark price for the USDT and USDC calculations in its funding fee documentation. Mark price is the venue reference price used to value positions. Hyperliquid uses its external price oracle to value funding payments. Its funding specification states this distinction explicitly.
For actual account reconciliation, use the contract formula and settled payment record. An estimate based on your entry price can differ from the charged amount.
Compare one-hour and eight-hour quotes
Divide a rate by its interval to obtain a simple hourly equivalent. Multiply that hourly equivalent by eight for a common eight-hour comparison.
Compare payments over the same window
0.00125% × 8 = 0.01%
| Hypothetical quote | Simple hourly equivalent | Simple eight-hour equivalent |
|---|---|---|
| +0.01% per eight hours | +0.00125% | +0.01% |
| +0.002% per hour | +0.002% | +0.016% |
| -0.008% per eight hours | -0.001% | -0.008% |
The second quote costs a long more than the first, despite its smaller displayed number. This comparison assumes the rate remains constant. It does not establish what either venue will charge later.
Our Bitcoin market page gives asset context for a funding comparison. Use the contract-level rows in the funding tool when checking a particular venue.
Check the settlement rules at the venue
The reviewed documentation describes different schedules. These examples do not cover every venue or contract.
| Venue | Documented process | Important limit |
|---|---|---|
| Hyperliquid | Hourly payments using one-eighth of its eight-hour formula | Builder-deployed markets can use different formula parameters |
| dYdX | Hourly funding under its documented software settings | Governance can change parameters |
| Bybit | Contract-specific intervals | An interval can change when a rate reaches its limit |
Hyperliquid describes the eight-hour formula and hourly payment separately in its funding rules. Bybit explains dynamic intervals in its rate calculation guide.
Bybit states that positions must be open at settlement to pay or receive funding. It also warns about uncertainty within five seconds of settlement. Closing near the timestamp therefore does not guarantee exclusion from that payment. Check the settled account record after the trade.
Estimate a holding cost without inventing a yield
Hypothetical example: keep a $20,000 long open for three days. Assume +0.01% funding every eight hours and unchanged position value. Nine payments of $2 produce an $18 cost.
A 30-day estimate uses 90 payments and produces $180. Dividing $180 by $2,000 of initial margin gives 9%. That percentage describes a funding cost relative to the assumed margin. It is not a price loss or a compounded rate.
The simple annualized equivalent is 0.01% × 3 × 365 = 10.95% of position value. A real year contains changing rates, prices, position sizes, and trading costs. Projecting one rate across that year does not predict a realized return.
For changing observations, add each payment separately. A three-period long with $20,000 of constant value might face +0.01%, -0.005%, and +0.02%. It pays $2, receives $1, and pays $4. The net cost is $5.
Combine funding with execution costs
A full trade includes entry and exit fees, the bid-ask spread, and possible slippage. A transfer or borrowing cost can also apply. Funding is one part of this total.
A small fee is only part of the cost
Half-spread + book impact = price cost from the midpoint. Adding the full spread again would count part of the cost twice.
Assume $8 of entry and exit fees in the three-day example. The $18 funding estimate produces a $26 cost before slippage and transfers. A lower fee at another venue helps only if the other costs permit the saving.
Use the cost comparison tool for its covered trade assumptions. Compare its scope with the venue contract. A missing funding observation does not establish a zero holding cost.
What funding can tell you about a market
A rate describes the cost of holding one side under a specific formula. A high positive observation can justify a closer look at long holding costs. It does not identify a certain price reversal or a safe entry time.
The same percentage can have different significance across assets and intervals. Compare the contract with its own available history. Check open interest, price changes, and liquidity separately. Aggregate open interest cannot reveal each trader's liquidation price.
For a hedged use of funding, read the funding rate arbitrage guide. That guide includes both costs and a case where the apparent hedge loses money.
Sources and calculation limits
The linked venue documentation was reviewed on September 13, 2026. The arithmetic examples are hypothetical and use constant dollar values unless stated otherwise. They are not a record of trades or a test of a trading strategy.
Does negative funding mean the asset will fall?
No.
Negative funding identifies which side pays under the contract rules. It does not determine the next price move.
Does leverage increase my funding bill?
Increasing position size increases the bill at the same rate.
Changing margin alone does not change funding on an unchanged position value.
Is an hourly payment cheaper than an eight-hour payment?
The total depends on the rates and the periods held.
Convert both quotes to the same interval before comparison.
Can I use the displayed annualized rate as expected income?
No.
That number extends a rate across a year under stated assumptions. Actual payments and costs can change.
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