Funding Fees
Beginner
What Are Funding Fees?
Funding fees are payments made between traders holding long (buy) or short (sell) positions in perpetual futures markets. The value of the payment depends on the funding rate, which is based on the difference between the futures price and the asset's spot price.
If the funding rate is positive, traders holding long positions pay a fee to short traders. If the rate is negative, the opposite occurs, with short positions paying long positions. This mechanism helps maintain stability and prevent significant price divergence between futures and spot markets.
How Do Funding Fees Work?
Funding fees are defined by funding rates, which are driven by two factors: the