A perpetual future is a contract that tracks the price of a coin but never expires. To stop the contract price from drifting away from the real spot price, exchanges use a funding mechanism. When traders are heavily long, the perpetual trades above spot, so longs pay shorts to bring it back down. When traders are heavily short, shorts pay longs.
The exchange itself does not collect this payment — it moves directly from one side of the market to the other. This is the key difference from a trading fee, which the exchange keeps.
The funding payment is simply your position value multiplied by the funding rate at each interval. Exchanges publish the current and predicted rate on every perpetual market page.
Note that the position value is the leveraged size, not your margin. A $1,000 margin at 10× leverage controls a $10,000 position, so funding is charged on the full $10,000.
Most exchanges settle funding every eight hours, giving three funding events per day. Some fast-moving markets use one-hour or four-hour intervals. You pay or receive funding only if you hold the position at the funding timestamp — traders who close just before it can avoid the charge.
For positions with a persistently negative-for-you funding rate, this is an important cost to factor in. Traders who hold leveraged positions for days should calculate the daily and weekly funding cost before entering.
If you simply want exposure to a coin without leverage, spot trading has no funding fee at all — you buy the coin and own it. Funding is the cost of the perpetual contract and its leverage. Long-term holders who do not need leverage almost always prefer spot for this reason.
Some traders also run a delta-neutral "funding harvest": holding spot and shorting the perpetual to collect a positive funding rate. This is an advanced strategy with its own risks. Use our free exchange check tool to check whether a specific exchange offers perpetual futures and what its funding intervals are.
For short-term traders who open and close within one funding interval, the trading fee is the dominant cost — they pay no funding at all. For traders who hold leveraged positions for days or weeks, funding can easily exceed the trading fee.
| Holding period | Dominant cost | Tip |
|---|---|---|
| Seconds–hours (intraday) | Trading fee | Focus on low taker fees |
| 1–3 days | Trading fee + some funding | Check both fee and funding rate |
| 1–4 weeks | Funding often > fee | Calculate weekly funding before entering |
| Months | Funding dominant | Consider spot instead of perpetual |
A funding fee is a periodic payment exchanged directly between traders holding perpetual futures, typically every eight hours. When the rate is positive, longs pay shorts; when negative, shorts pay longs. The exchange does not keep it.
Funding payment = Position value × Funding rate. For example, a $10,000 long at a 0.01% rate pays $1.00 per interval. Over a day with three intervals that is about $3.00. It is charged on the leveraged position size, not your margin.
Most exchanges settle funding every eight hours, three times a day, though some use shorter intervals. You only pay or receive funding if you hold a perpetual position at the funding timestamp. Closing before it avoids the payment.
No. Funding applies only to perpetual futures. If you buy and hold coins on the spot market, there is no funding cost. Check funding rates with our exchange check tool.
Last updated 2026-09-16. This article is for educational purposes only and does not constitute financial advice.