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Funding Rate
The funding rate is a periodic rate used to calculate funding payments between traders in many perpetual futures markets. Funding is one of the mechanisms used to encourage the perpetual contract's price to remain reasonably aligned with the underlying market.
Why it matters to you
Funding creates a cost or payment for holding certain perpetual positions. When funding is positive, long positions generally pay short positions. When funding is negative, short positions generally pay long positions. Funding also gives traders useful information about positioning and market conditions, particularly when it becomes unusually high or low.
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