# Funding Rates on Perps: The Cost Nobody Prices In

URL: https://www.caijing188.com/perpetual-funding-cost/
Published: 2026-10-27T22:56:42+08:00 | Updated: 2026-10-27T22:56:42+08:00
Verified: 2026-10-27

## Quick answer
Funding is a periodic payment between longs and shorts, charged on notional. Annualised, it often costs more than the trading fee.

## Summary
Funding is a transfer between longs and shorts, not a venue fee. Annualised and applied to notional, it can quietly consume most of a leveraged position's equity.

## FAQ
Q: Is the perpetual funding rate a fee?
A: No. It is a transfer between traders holding opposite sides of the same contract. The venue calculates and settles it, but the money moves from one participant to another. Treating it as revenue to the platform leads to the wrong conclusion about who is paying whom.
Q: How do I convert an eight-hour rate to a yearly one?
A: Multiply by three to get a daily figure, then by 365. For compounding, raise one plus the rate to the power of 1,095 and subtract one. The compounded result is always the larger of the two and diverges further as the rate rises.
Q: Does funding apply to my margin or my position size?
A: Position size, meaning notional. Leverage multiplies the drag on your equity without changing the rate. This is the single most common source of underestimated cost in leveraged holds.
Q: Can funding be avoided by closing before settlement?
A: For that interval, yes, if you are flat at the timestamp. But the effect is only worth chasing when the expected charge exceeds the round-trip cost of closing and reopening, which it usually is not for small rates.
Q: Why do two venues show different rates for the same asset?
A: Different index composition, different premium sampling, different caps, different intervals. Each rate reflects local leverage demand on that venue. Divergence is normal and is the basis for cross-venue funding trades.
Q: Is negative funding a yield?
A: It is a payment to whoever holds the side the market is short of, and it is compensation for taking the unpopular side of a crowded trade. It is not free yield: the position still carries price risk, liquidation risk and the possibility that the sign flips against you.