Data as of October 1, 2026. Perpetual contracts are complex instruments and may be liquidated rapidly. Funding rates and mark prices change without notice. Leverage magnifies gains and losses. Fees, network costs, and slippage reduce returns. Past performance is not indicative of future results.
Because perpetual contracts never expire, funding is the mechanism that keeps them anchored to the real asset price. Depending on market conditions, you may either pay or receive funding while your position is open.
Why do funding rates exist?
A traditional futures contract eventually expires, which naturally pulls its price back toward the underlying asset. A perpetual contract never expires, so it needs another way to stay aligned. That’s the purpose of funding: it creates periodic payments between long and short holders that encourage traders to take the less crowded side, helping keep the perpetual price close to the underlying price.
Who pays funding?
The simplest rule to remember:
Funding rate | Who pays? | Who receives? |
|---|---|---|
Positive | Longs | Shorts |
Negative | Shorts | Longs |
A positive funding rate generally appears when the perpetual price is trading above the underlying market price — longs pay shorts. A negative rate appears when the perpetual price is below the underlying — shorts pay longs. Funding is separate from the trading fee you pay when opening or closing an order. On Nado, funding payments are applied every hour.
How does funding affect your position?
Imagine you hold a perpetual position worth 10,000 USDT0 and the next funding rate is +0.05%:
Position | Funding rate | Estimated payment |
|---|---|---|
10,000 USDT0 Long | +0.05% | Pay about 5 USDT0 |
10,000 USDT0 Short | +0.05% | Receive about 5 USDT0 |
Importantly, funding is calculated from your full position size, not just your margin. If you use 1,000 USDT0 of margin to open a 10,000 USDT0 position, the funding payment is based on the full 10,000 USDT0. The larger your position and the longer you hold it, the more funding can affect your result.
What does a high funding rate mean?
A high positive funding rate usually means long positions are the more crowded, more expensive side — longs are paying more to hold. A high negative rate means the opposite: shorts are paying longs.
Key point: A high funding rate does not predict price direction. High positive funding does not mean "the price must fall" — it means longs currently cost more to hold. Funding shows current positioning and holding cost, not the next price movement.
How can traders use funding information?
Before opening a position, check which side is paying. If funding is positive and you plan to go long, funding will be a cost if you hold through settlement; if you go short, you may receive it. Then consider how long you’ll hold — for a very short trade, funding may have little effect, but across several funding periods the payments accumulate. Finally, compare the funding cost with your expected profit.
Don’t trade only to collect funding. Funding is usually much smaller than the potential profit or loss from price movement. You could receive 5 USDT0 in funding while losing 100 USDT0 because the market moved against you.
Key takeaways
Funding keeps perpetual prices aligned with the underlying market.
Positive funding: longs pay shorts. Negative funding: shorts pay longs.
Funding is based on full position size, not just margin.
A high funding rate reflects positioning and cost — not a prediction of direction.
Funding is one cost to weigh, not a reason to open a trade by itself.