Post
QuangHaiJK
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BearishDo you guys understand clearly about funding fee?
✨Funding fee (or funding rate) is a very important concept in perpetual futures trading in the crypto market. This is not a fee collected by the exchange, but a direct payment between traders.
The funding fee (or funding rate) in perpetual futures is like a "position rental fee" that both sides of traders have to pay each other to keep the contract price from deviating too far from the real price (spot price).
👉Let me explain it in a very simple way like a daily conversation:
How does funding work? (simple visualization)
Imagine the perpetual futures market as a scale:
Long side (betting on price increase) ↔ Short side (betting on price decrease).
If the scale tilts heavily to one side (more Longs than Shorts, or vice versa), the futures price will deviate far from the real price → not good for the market.
→ The exchange creates funding to "penalize" the larger side and reward the smaller side:
👉For example:
You hold a Long position of 10,000 USDT (margin + leverage).
Current funding rate = +0.03% (0.0003).
→ You have to pay 10,000 × 0.0003 = 3 USDT to the Short side (each funding period, usually every 8 hours).
If the funding rate = -0.03%, you will receive 3 USDT from the Short side.
Benefits of understanding and using the funding rate
Predicting market sentiment: High positive funding rate → the market is too optimistic (may reverse). Deep negative → too pessimistic.
Long-term holding strategy: If you Long BTC in a long bull market, a high positive funding may "erode" profits gradually.
Funding earning strategy: Some people open positions against the market to "farm" funding (receive fees from the other side), especially when the rate is extremely high.
$RIVER
{future}(RIVERUSDT)
$DASH
{future}(DASHUSDT)
✨Funding fee (or funding rate) is a very important concept in perpetual futures trading in the crypto market. This is not a fee collected by the exchange, but a direct payment between traders.
The funding fee (or funding rate) in perpetual futures is like a "position rental fee" that both sides of traders have to pay each other to keep the contract price from deviating too far from the real price (spot price).
👉Let me explain it in a very simple way like a daily conversation:
How does funding work? (simple visualization)
Imagine the perpetual futures market as a scale:
Long side (betting on price increase) ↔ Short side (betting on price decrease).
If the scale tilts heavily to one side (more Longs than Shorts, or vice versa), the futures price will deviate far from the real price → not good for the market.
→ The exchange creates funding to "penalize" the larger side and reward the smaller side:
👉For example:
You hold a Long position of 10,000 USDT (margin + leverage).
Current funding rate = +0.03% (0.0003).
→ You have to pay 10,000 × 0.0003 = 3 USDT to the Short side (each funding period, usually every 8 hours).
If the funding rate = -0.03%, you will receive 3 USDT from the Short side.
Benefits of understanding and using the funding rate
Predicting market sentiment: High positive funding rate → the market is too optimistic (may reverse). Deep negative → too pessimistic.
Long-term holding strategy: If you Long BTC in a long bull market, a high positive funding may "erode" profits gradually.
Funding earning strategy: Some people open positions against the market to "farm" funding (receive fees from the other side), especially when the rate is extremely high.
$RIVER
{future}(RIVERUSDT)
$DASH
{future}(DASHUSDT)
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