2026-01-18 10:28:34

Understanding Funding Rates in Perpetual Futures

Funding rates represent the periodic fees exchanged between traders holding long and short positions in perpetual futures contracts. These mechanisms serve a critical purpose: maintaining alignment between perpetual futures prices and actual spot market prices.

How it works: When perpetual futures trade at a premium above spot prices, traders betting on price increases (longs) pay fees to those betting on declines (shorts). Conversely, when futures trade below spot rates, shorts compensate longs. This self-regulating system prevents extreme price divergence and keeps the derivatives market anchored to reality.

For traders, understanding funding rates is essential for calculating true trading costs and managing risk exposure across different market conditions.

This page may contain third-party content, which is provided for information purposes only (not representations/warranties) and should not be considered as an endorsement of its views by Gate, nor as financial or professional advice. See Disclaimer for details.

12 Likes

Reward
12
7
Repost
Share

Comment

0/400

TokenUnlocker

· 01-18 10:58

The funding rate of perpetual contracts, to put it simply, is a mechanism where longs and shorts keep bleeding each other. Keep a close eye on it.

View OriginalReply0

GasFeeCrier

· 01-18 10:58

The funding rate of perpetual contracts, to put it simply, is like a toll for betting on long or short positions.

View OriginalReply0

SerLiquidated

· 01-18 10:52

The funding rate logic of Yong Contract is actually an automatic balancer. You don't realize it when things are good, but you understand it when you're being liquidated.

View OriginalReply0

ZKSherlock

· 01-18 10:45

actually... people still get this backwards lol. funding rates aren't just "fees" – they're a mechanism that enforces this equilibrium through information-theoretic constraints, yeah? it's elegant when u think about it mathematically, but most traders treat it like some random tax smh

Reply0

BTCBeliefStation

· 01-18 10:44

The funding rate for perpetual contracts is basically a mechanism where longs and shorts mutually exploit each other.

View OriginalReply0

GasFeeSobber