What is perpetual contract funding rate?

The perpetual contract funding rate is a trading cost that is charged or paid by traders during their position holding process in perpetual futures trading. It is calculated by the funding rate mechanism of the digital currency exchange and is used to balance the interests of long and short positions in futures and prevent prices from deviating excessively from the underlying index price. It is calculated periodically during the traders' position holding process and settled according to the contract rules.

When the bullish force is stronger in the contract market, the exchange will charge funding fees from the bearish side to the bullish side, and vice versa when the bearish force is stronger. The funding rate is calculated based on the difference between the contract price and the underlying index price, and when the difference is large, the funding rate will be correspondingly high.

When using perpetual contracts trading, traders need to pay attention to the changes in the perpetual contract funding rate. When the funding rate is positive, long positions need to pay funding fees, while short positions will receive funding fees, and vice versa when the funding rate is negative. Traders can view the current perpetual contract funding rate on the exchange's trading interface and adjust their position holding strategy based on the funding rate's changes.

In summary, the perpetual contract funding rate is an important cost in perpetual contracts trading. Traders need to pay attention to the changes in the funding rate and adjust their position holding strategy reasonably to achieve a better trading experience and profit performance.