$ qubo learn derivatives/02

Funding rates: what the crowd is paying

A perpetual future never expires, so something has to keep its price close to the spot price. That something is the funding rate: a small payment exchanged every few hours between traders who are long and traders who are short.

When funding is positive, longs pay shorts. When it is negative, shorts pay longs. Rates are usually quoted per 8 hours; 0.01% per 8 hours is roughly 11% a year.

When funding is high and positive, many traders are paying to stay long. It tells you how crowded a position is, not where the price will go next. Crowded trades can last for weeks.

Funding is most informative in context: compared with its own history, across assets, and together with open interest.

// rule to remember

// your turn

Open Perps Hyperflow and find the asset with the highest funding right now. Is its open interest rising too?

Educational content only. Not investment advice. Past data does not predict future results. Risk disclosure