Funding Rate vs Perpetual Futures Contract

A periodic payment exchanged between long and short holders of a perpetual futures contract, calculated to keep the contract price anchored to the spot price; positive funding means longs pay shorts; negative funding means shorts pay longs; typically settled every 8 hours on major exchanges.

A derivative instrument that functions like a futures contract but has no expiry date; price is kept anchored to the underlying spot asset through a periodic funding rate payment mechanism rather than through expiry-date convergence.