Updated 2026-07-25
The funding rate is a small periodic payment exchanged between the two sides of a perpetual contract. Perps never expire, so there is no settlement to pull them back to spot. Funding does that job instead: when the perp trades at a premium, longs pay shorts, and when it trades at a discount, shorts pay longs. Most venues settle every eight hours, and some use shorter intervals.
The payment is calculated on position notional, not on your margin, so it is unaffected by leverage and you only pay or receive if you hold through the settlement timestamp. Read it as a positioning gauge rather than a forecast: persistently high positive funding shows a crowded long side paying to stay long, which is information about crowding, not a timing signal. Full guide: funding rate explained.