What is the funding rate in perpetual futures?
Perpetual futures have no expiry, so a small funding fee is paid at set times. Here is how funding works on Escoin Exchange and how to read it.
Perpetual futures never expire. To keep their price close to the market, traders on one side pay a small fee at regular times and traders on the other side receive it. This fee is called funding, and the percentage used is the funding rate.
Who pays whom
- Positive rate: longs pay shorts.
- Negative rate: shorts pay longs.
On Escoin Exchange, funding is settled through the exchange's insurance fund: what you pay goes into the fund, and what you receive is paid from it. Only open positions take part. If you have no position at the moment of funding, you neither pay nor receive.
How much you pay
The amount is your position value multiplied by the rate. For example, with a position worth 1,000 USDT and a rate of 0.01%, the payment is 0.10 USDT. Leverage does not change the rate, but it makes your position larger, so the payment is larger compared to your margin.
How the rate is set on Escoin
The rate has two parts: a small base rate and a premium that depends on the balance between open long and short positions. When most open positions are long, the rate rises and longs pay more; when most are short, it falls and can turn negative. The rate has an upper and a lower limit.
The standard interval is every 8 hours. When the rate becomes very high or very low, the interval can shorten to 4 hours or 1 hour, so the imbalance is corrected faster.
The current rate, the next funding time and the interval are shown on each futures market page (/futures). The same schedule applies to USDT-M and COIN-M contracts.
Why it matters to you
- For short trades of a few hours, funding is usually small compared to fees and price moves.
- For positions held for days, funding adds up. Check the rate before you open and while you hold.
- A very high positive rate means many traders are long. That is useful information, but it is not a signal that the price will fall.
Funding payments appear in your futures history. More answers about futures are in the Help Center (/help).