In this guide
What does a crypto funding rate tell you?
A crypto funding rate helps determine a periodic payment between the long and short sides of a perpetual contract. Under the convention described by Coinbase Help and Poloniex, a positive rate means longs pay shorts; a negative rate means shorts pay longs. To read the payment, you need the rate's period and the value it applies to, as well as its sign.
Poloniex's explanation describes these payments as a mechanism intended to bring a perpetual contract's price toward its underlying index price. That purpose is different from a promise that the two prices will match.
This guide follows one fictional period, called P, using an invented payment design. P has no assigned number of hours. The example explains the numbers; it is not a current payment quote or contract specification for an exchange.
Read the rate's sign and each holder's cashflow separately
The sign convention in Coinbase's funding-rate help page agrees with the Poloniex explanation: positive sends the payment from long to short, while negative sends it from short to long.
Now distinguish that rate sign from the sign of a holder's cashflow. In the example below, a negative cashflow is money going out and a positive cashflow is money coming in. A positive funding rate therefore produces a negative funding cashflow for the long holder. It does not mean both holders receive a positive payment.
Calculate one period on the stated notional
For our fictional linear design, assume a constant notional of 1,000 illustrative currency units. Notional is the stated basis of this calculation, not a wallet balance, margin deposit or profit. We define the payment magnitude as:
Payment magnitude = stated notional × absolute rate for P
The absolute rate gives the size of the payment. The selected sign convention tells you its direction. The two rows below are alternative cases for one period, not two successive payments or instructions to hold both positions.
| Assigned rate per P | Decimal rate | Payment magnitude | Long holder's cashflow | Short holder's cashflow |
|---|---|---|---|---|
| +0.01% | +0.0001 | 0.10 units | −0.10 units: pays | +0.10 units: receives |
| −0.02% | −0.0002 | 0.20 units | +0.20 units: receives | −0.20 units: pays |
In the positive case, 1,000 × 0.0001 = 0.10 units moves from the long holder to the short holder. In the negative case, 1,000 × 0.0002 = 0.20 units moves in the other direction. The payment magnitude stays nonnegative; the two holder cashflows have equal sizes and opposite signs in this design.
For comparison, Poloniex's article gives its own numerical example: an 80,000 USDT position value multiplied by 0.01% produces an 8 USDT funding payment, with the illustrated long paying the opposite short. That source example is separate from our invented 1,000-unit design and is not a statement of current contract settings.
Keep the rate, payment and total result separate
A percentage and a payment amount are different quantities. So are a funding inflow and a trading profit. When you read a funding figure, label what it measures before deciding what it means.
| Quantity | What it means here | What it does not establish |
|---|---|---|
| Rate: +0.01% per P | An assigned percentage for one illustrative period, using the selected payment direction. | An annual yield or an actual exchange schedule. |
| Notional: 1,000 units | The fixed value to which this example applies the rate. | Margin, wallet balance or the amount of capital at risk. |
| Long cashflow: −0.10 units | The outgoing funding payment in this case. | The long holder's total loss or all fees. |
| Short cashflow: +0.10 units | The incoming funding payment in this case. | A net trading profit or reliable income. |
The calculation leaves out price profit or loss, transaction fees, borrowing interest, margin and liquidation. Receiving the 0.10-unit funding payment therefore does not tell you the holder's overall result. For a separate explanation of cost categories, see trading, funding-route and other fees; those product-specific costs should not be substituted into this fictional perpetual-payment example.
The word funding can also refer to adding money to an account. That deposit or top-up is a different operation from the periodic payment between holders described here.
A single payment does not establish an income
We assigned both rates and kept the notional fixed for one period. Nothing in that exercise determines a later rate, how many payments occur, or a yearly return. Repeating or annualizing the numbers would add assumptions that the example does not make.
For an actual contract, its own documents would need to establish the payment basis, timing, holding conditions and other terms. The named explanations here do not certify current clocks, caps, rounding rules or your eligibility. The Coinbase page's sign convention is not evidence that every Coinbase product has identical rules.
Keep the contract's obligations separate from the reason someone holds it. The guides to investment and trading obligations and the limits of risk–reward calculations cover those broader distinctions. Neither turns a funding receipt into a guarantee of profit.
Common questions about funding rates
Who pays when the funding rate is positive?
Under the convention described in the Coinbase and Poloniex sources, the long side pays the short side. In our +0.01% example, that means a 0.10-unit outflow for the long holder and a 0.10-unit inflow for the short holder.
What changes when the funding rate is negative?
The payment direction reverses: shorts pay longs. Our separate −0.02% case has a 0.20-unit payment from the short holder to the long holder. A negative rate is not a negative cashflow for both.
What is the difference between the rate and the payment?
The rate is a percentage for a stated period. The payment is an amount. In this fictional linear design, multiplying the 1,000-unit notional by the absolute period rate gives its magnitude; the selected convention supplies its direction.
Is the example payment calculated on margin?
No. It uses the explicitly stated 1,000-unit notional. We do not calculate a margin amount, use a wallet balance or apply a leverage multiplier.
Is receiving funding the same as earning a profit?
No. A funding receipt is one cashflow. Our example does not calculate price profit or loss, other fees or the holder's total result, and it establishes no continuing income or annual yield.
Explore HypaForecast markets
Browse the market list, or view the questions and round details on the BTC 5-minute and 15-minute pages. These links are separate from the funding-payment example and do not establish current availability or your eligibility.
Sources and example scope
This guide uses the undated Poloniex funding-rate explanation and Coinbase Help’s description of the payment direction. It uses their explanatory text, not a verified current contract rulebook. The 1,000-unit, single-period design is invented; it is separate from Poloniex’s attributed numerical example. Current exchange schedules, caps, rounding and eligibility are outside this guide’s scope.
HypaForecast publishes educational guides and operates a prediction market. This perpetual-contract explanation does not establish that HypaForecast offers perpetuals or funding payments, or that you are eligible to trade.
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