Funding Rate: A Guide to Cryptocurrency Interest and Swap Fees

What is Funding Rate?

Funding Rate, also known as Funding Fee, is an interest rate or fee paid periodically to traders who hold long or short positions in a cryptocurrency futures contract. Its primary purpose is to maintain price equilibrium between the futures and spot markets.

Understanding Funding Rate

Funding Rate measures the difference between the price of an asset in the futures market and the spot market. When the futures price exceeds the spot price, indicating a higher demand for futures contracts, traders who hold long positions (buyers) receive payments from traders who hold short positions (sellers). This encourages sellers to enter the market, increasing the supply of futures contracts and pushing the futures price closer to the spot price. Conversely, when the spot price exceeds the futures price, traders who hold short positions receive payments from long position holders. This incentivizes buyers to enter the market, reducing the supply of futures contracts and pushing the futures price up towards the spot price.

Real-Time Funding Rate Data

Several platforms provide real-time funding rate data for various cryptocurrency exchanges, including: * Binance * OKX * Bybit * Bitget * Dydx * Bitmex * Bitfinex * Gateio These platforms allow traders to track the funding rate for different perpetual swaps and visualize it in graphical charts, providing valuable insights into market sentiment and potential trading opportunities.