Beginner guide
What is a funding rate?
Funding rates keep a perpetual future tracking the spot price. Here is what they mean, who pays whom, and why the differences between exchanges create opportunities.
The funding rate in one paragraph
A perpetual future never expires, so exchanges use a periodic payment called funding to keep its price close to the underlying spot market. When the perp trades above spot, longs pay shorts; when it trades below spot, shorts pay longs.
The rate is usually small and charged every few hours. It is paid directly between traders, not to the exchange, and it is the core mechanism behind funding-arbitrage strategies.
- Positive funding: longs pay shorts.
- Negative funding: shorts pay longs.
- Charged on a fixed interval (often hourly or 8-hourly).
Why funding rates differ across exchanges
Each venue computes funding from its own order book, premium, and clamp settings, so the same asset can have very different funding on two exchanges at the same moment.
Those differences are exactly what a funding scanner surfaces: pair the venue paying you to hold one side against the venue charging less on the other, and the spread becomes a potential carry.
- Funding is venue-specific, not universal.
- Spreads open and close as flows shift.
- A scanner ranks where the spread is currently worth attention.
Who pays the funding rate?
Traders pay each other. With positive funding, longs pay shorts; with negative funding, shorts pay longs. The exchange is not the counterparty to the funding payment.
How often is funding paid?
It depends on the venue. Many charge every 8 hours, while several DEX perps fund hourly. SypherScore normalizes rates so venues can be compared fairly.
Can I earn funding without picking a direction?
Yes, by going delta-neutral: hold an offsetting long and short so price exposure cancels and you are left collecting the funding spread.