Funding Rate
Funding fee · Perpetual funding
The payment that long and short positions in perpetual futures make to each other at set times.
Simple explanation
Background: Korean exchanges offer spot trading only, not futures, so Korean traders watch the funding rates of overseas exchanges such as Binance.
A perpetual future is a futures contract with no expiry date. Because it never expires, it needs something that keeps its price close to the spot price, and that is the funding rate.
When the futures price is above spot and longs (bets on a rise) dominate, the funding rate is positive and longs pay shorts. When shorts dominate and the futures price is lower, it turns negative and shorts pay longs. The money changes hands between traders; it is not a fee the exchange keeps.
You pay or receive it only if you hold a position at the settlement time. The interval differs by exchange and coin: Binance usually settles every 8 hours (01:00, 09:00 and 17:00 Korea time, that is 16:00, 00:00 and 08:00 UTC), and some coins settle every 4 hours or every hour.
A strongly positive funding rate means a lot of money is betting on a rise, so traders also read it as a sign of market mood. Where the kimchi premium shows how hot Korea's spot market is, the funding rate shows how hot the overseas futures market is.
Example
Bitcoin long position size ₩10,000,000 (the full size, including leverage)
Funding rate +0.01% (per 8-hour settlement)
Paid at settlement = 10,000,000 × 0.01% = ₩1,000 (long → short)
※ Example numbers, for illustration only
See it on CoinGaja
- CoinGaja does not show funding rates yet. The gap between Korean and overseas spot prices (the kimchi premium) is here:
- Kimchi premium by coin›
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