Funding Rate vs Premium Index

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.

The percentage difference between the mark price and the index price; the primary component of the funding rate calculation; reflects the balance of demand between long and short sides of the perpetual futures market.