Perpetual futures never expire, so exchanges use a funding rate to tether their price to spot. This GasSaver Signals guide explains the mechanism before you consider leverage.
Why this topic matters
When perpetuals trade above spot, longs pay shorts; below spot, shorts pay longs. The rate is small most of the time, but in euphoric markets it reaches double-digit annualized levels — a silent position cost many first-time futures traders never notice until it compounds.
How to do it well
Check the current rate and its history before opening a position. Extreme positive funding signals crowded longs; extreme negative signals crowded shorts. Funding is income for the paid side and expense for the paying side — factor it into any holding period.
Practical checklist
- Check funding rate and history before entry
- Treat extreme funding as a crowding signal
- Include funding in any position-holding cost model
- Remember spot has no funding at all
Common mistakes
The dangerous pattern is opening a leveraged long at peak positive funding: the position pays rent precisely when a squeeze is most likely. Funding is a signal as much as a cost, and signals are loudest at the worst moments.
What it looks like in practice
Concrete case: a perpetual holds at 0.05 percent per eight hours in normal times — noticeable but small. In a mania week it can print 0.3 percent per interval; a long held through seven days pays over 6 percent just to keep the position open, before price has moved a cent. The rate is the market telling you which side is crowded.
Keep reading on GasSaver Signals
- how to check gas prices a practical guide for drivers and crypto users
- what is gas limit a clear guide to ethereum transaction settings
FAQ
Is funding the same as interest?
It works similarly for perpetual positions, but it is a market mechanism between traders — not a payment to the exchange.
Can I avoid funding entirely?
Only by closing before funding timestamps or trading dated futures. Spot has no funding, which is why it remains the starting point.
Educational content only — not financial, legal or tax advice. Facts verified October 2026.