Funding rates are a mechanism that exchanges use to ensure that perpetual futures trade at a price that is close to the price of the underlying spot markets. For the perpetual futures in our coverage universe, we offer realized funding rates.
While the formula for how the funding rate is calculated varies by exchange, the general principle is that the funding rate is positive if the perpetual futures’s price is higher than the underlying’s spot price and negative if the perpetual futures' price is lower than the underlying’s spot price. If the funding rate is positive, long position holders will pay the funding payment to short position holders. If the funding rate is negative, short position holders will pay the funding payment to long position holders. Therefore, the funding rate mechanism encourages traders to take positions that keep perpetual futures’s prices in line with the underlying’s spot price.
Exchanges differ in their funding rate mechanism design and how they report the data through their API. This section will discuss the key differences between exchanges and our approach to creating a normalized data model.
Realized funding rate: Many exchanges report two different funding rates. The realized funding rate represents the actual funding rate calculated over the previous funding interval, and is used in determining the funding payment. The predicted funding rate is the current estimate of what the funding rate will be at the end of the current funding interval. Some exchanges refer to this as the real-time funding rate or the next funding rate. While the predicted funding rate could be important to certain users, in this data concept we are concerned about the realized funding rate. Any references to the term “funding rate” in this document refer to the realized funding rate.
Funding interval: The funding interval represents how often the funding rate and funding payments are calculated. For many exchanges, a funding rate is produced every 8 hours and it is calculated based on the difference between the futures’ price and the spot’s price over the previous 8 hours. In this case, the funding interval is 8 hours. For some exchanges, the funding rate and funding payments are calculated on a continuous basis, so the funding interval is set to 1 millisecond by convention.
|Exchange||Funding Rate Frequency|
|BitMEX||every 8 hours|
|Bybit||every 8 hours|
|Kraken||every 4 hours|
|OKEx||every 8 hours|
|Huobi||every 8 hours|
Our Funding Rate endpoints are available via REST API for historical (time series) data as well as WebSockets for real-time data.
This table outlines how far back our Funding Rate data goes across the different exchanges within the Futures and Swaps markets:
|Exchange||Futures Market Start Date*||Swaps Market Start Date*|
*These dates represent the oldest start date we have for Funding Rate data across all contracts
**As of 2022-11-12, we stopped supporting FTX, but historical data will remain available
Frequently Asked Questions
What are Funding Rates in crypto?
- Funding rates make the perpetual futures contract price close to the index price. It is made be closer to the spot prices and cover some of the gap generated by the perpetual period of time. All cryptocurrency derivatives exchanges use funding rates for perpetual contracts and the standard unit is a percentage. Funding Rate is a result of market behaviors and could be used to maker some interpretation in the derivative market which also is a dominant price maker in the market. However, correlating high funding rates with inevitable price drop could be a wrong interpretation. In the bull market, it have a tendency to naturally bring high funding rates with price rise.
Updated 4 months ago