Funding rates: the hidden cost of perpetual futures

How funding works

When the perpetual trades above spot, the funding rate turns positive and longs pay shorts. When it trades below spot, the rate turns negative and shorts pay longs. The payment passes between traders; it is not a fee the exchange keeps.

On Binance USDⓈ-M perpetuals, funding is exchanged every 8 hours by default, at 00:00, 08:00 and 16:00 UTC, and some contracts switch to shorter intervals in volatile markets. Other exchanges and contracts use 1, 4 or 8 hours, so check the contract details before you trade.

Working out the cost

The payment is the position's notional value times the funding rate. Margin and leverage do not change it: a 10,000 USDT position pays the same whether you posted 10,000 or 1,000 of margin.

Illustrative example: a 10,000 USDT long held while funding stays at +0.01% per 8 hours.

• Per interval: 10,000 × 0.01% = 1 USDT
• Per day, three intervals: 3 USDT
• Per 30 days: 90 USDT, which is 0.9% of the position or 9% of a 1,000 USDT margin at 10× leverage

Reading the rate

0.01% per 8 hours is a common baseline: on Binance the default interest-rate component alone is 0.03% a day. When funding climbs well above that, the long side is crowded and paying up to stay in. Deeply negative funding means the opposite.

Extreme funding often shows up near short-term tops and bottoms, because crowded positions are the ones that get squeezed. It is a sentiment reading, not a timing signal.

Practical rules

• Count funding as part of the trade's cost, next to fees, before you open a position you plan to hold for days.
• Funding is charged on notional, so high leverage magnifies it as a share of your margin.
• Spot has no funding. For holds of weeks or months, spot can be cheaper than a perpetual.