Funding

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Whereas quarterly futures expire, perpetual futures have funding payments every hour. Specifically, every hour, we measure the 1 hour TWAP of the perpetual future and the 1 hour TWAP of the underlying index:

If the perpetual is trading at a premium to the underlying index, long positions pay funding to the short positions. If the perpetual is trading at a discount to the underlying index, short positions pay funding to long positions. The funding rate to be paid/received is determined by the following formula:

position size * TWAP of ((future mark price - index) / index) / 24

This is similar to the future expiring once per day. In particular, if you sell a BTC perpetual future which is trading 0.10% above the underlying index all day, then over the course of the next day you will receive a total funding payment of 0.10%.

You can find historical funding rates here.

 

 

 

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