Funding rates are periodic payments exchanged between long and short traders in perpetual futures markets. They keep the perpetual contract price anchored to the spot price and reveal the cost of holding leveraged positions.
What It Measures
A funding rate is a percentage-based fee paid from one side of the market to the other at regular intervals — typically every 8 hours on most exchanges. When the rate is positive, long traders pay short traders, indicating more demand for long positions. When the rate is negative, short traders pay long traders, indicating more demand for short positions. The rate is calculated based on the difference between the perpetual futures price and the spot price of the underlying asset.
Why It Matters
Funding rates directly affect the cost of holding a leveraged position. High positive funding rates make long positions expensive to maintain, which can force traders to close and potentially trigger price drops. High negative funding rates make short positions expensive, which can lead to short squeezes. Traders monitor funding rates to assess whether the market is overly leveraged in one direction and to estimate the carry cost of their positions. Perpetual DEXs like Hyperliquid, Aster, and Lighter each have their own funding rate mechanics.
How CoinDuck Tracks It
CoinDuck collects funding rate data from perpetual DEX APIs in real time. Rates are displayed per market, showing current funding, next funding time, and historical trends. The dashboard allows you to compare funding rates across different protocols and identify which markets have the most expensive or cheapest positioning costs.
Most perpetual futures exchanges pay funding every 8 hours, though some use 1-hour or 4-hour intervals. The exact schedule varies by protocol.
What does a high positive funding rate mean?
A high positive funding rate means long traders are paying short traders a premium. This typically indicates the market is bullish and overleveraged on the long side, which can increase the risk of a pullback.
Can funding rates be negative?
Yes. When the perpetual price trades below the spot price, funding rates turn negative and short traders pay long traders. This often happens during bearish market conditions.
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