💱Funding Rates

Perpetual futures use a funding rate model instead of an expiration-based settlement. Funding rates are periodic payments exchanged between traders holding long and short positions. These payments are designed to keep the price of the perpetual contract in line with the spot price of the underlying asset.

• When the funding rate is negative, short positions pay long positions.

• When the rate is positive, long positions pay short positions.

This system maintains a balance, ensuring the perpetual contract's price doesn’t stray far from the actual asset price.