What is the funding rate?
Perpetuals are contracts that track the price of an asset and never expire. To keep the contract price aligned with the actual market price, Cronos app uses a mechanism called the funding rate.
The funding rate is a small periodic payment exchanged between traders who are long (betting the price goes up) and traders who are short (betting the price goes down). It is not a fee charged by Cronos app. It is a transfer between traders. See What fees do I pay on perps.
Who pays and who receives?
The direction of the payment depends on which side is more dominant in the market at any given time.
When more traders are long than short, longs pay shorts. This makes holding a long position slightly more expensive, which discourages more longs from piling in and keeps the contract price from rising too far above the real market price.
When more traders are short than long, shorts pay longs.
The amount you pay or receive depends on the size of your position and the current funding rate. A higher funding rate means a larger transfer per interval.
How often is funding charged?
Funding is charged every hour. The amount is automatically added to or deducted from your perps funds balance each hour that you hold an open position.
If you open and close a position within the same hour, no funding is charged.
Where to see your funding
Your open position shows the total funding you have paid or received since the position was opened. Every individual funding payment also appears in your perps transaction history, and the current funding rate for each asset is shown in the app.
Questions
Can the funding rate change?
Yes. The funding rate adjusts based on the balance of long and short positions in the market. It can change every hour and can be positive or negative.
What happens if I hold a position overnight?
Funding is charged every hour, so holding a position overnight means multiple funding payments. Check the current funding rate before holding a large position for an extended period, as the cost can add up.
Is the funding rate the same for all trading pairs?
No. Each trading pair has its own funding rate, which reflects the market dynamics of that specific asset.
Can I receive funding instead of paying it?
Yes. If you are on the side that receives funding (for example, you are short when the funding rate is positive), funding is added to your perps funds each hour.