Funding rates · perpetual futures
Positive vs negative funding: who pays whom in perpetual futures
Funding transfers value between eligible long and short perpetual positions. Under the common convention, positive funding means longs pay shorts and negative funding means shorts pay longs. The sign reflects the venue's current pricing mechanism, not a prediction that the market must reverse.
Start with the venue convention
Read the contract specification before interpreting the sign. Exchanges can use different mark prices, indices, caps and funding intervals, so the displayed rate is meaningful only in its own venue and contract context.
Separate a payment from a forecast
Positive or negative funding can accompany crowding, hedging or a premium or discount in the perpetual market. It does not establish the next price move, liquidity conditions or the risk of a leveraged position.
Keep the interval visible
A rate belongs to a specific funding window. Compare the asset, contract, rate timestamp and interval before comparing venues or estimating a payment.
What the two signs mean
Perpetual futures have no expiry date, so venues use funding to encourage their contract price to stay close to an underlying reference. The payment normally passes between traders holding positions at the funding time; it is separate from trading fees and does not remove market risk.
On Coinbase International Exchange, a positive rate is associated with a perpetual trading above its spot reference and long positions paying short positions. A negative rate reverses the direction. That is a useful example, but the specific venue documentation remains authoritative for every contract.
Why the sign can change
Demand for leveraged long exposure can lift a perpetual above its reference price, while demand for short exposure or selling pressure can contribute to a discount. Liquidations, hedging activity, fragmented liquidity and changes in the venue's index can also affect the displayed rate.
None of those observations proves a crowd is wrong. Funding can remain positive or negative through a strong move, and it can flip before settlement. Treat the sign as a current market-structure input, alongside price, spread, liquidity and your own risk limits.
A practical reading sequence
First record the venue, contract, current rate, settlement interval and next funding time. Then check which side pays under that contract's rule and compare its perpetual price with the venue's stated mark or index rather than an unrelated chart.
Finally, estimate the possible transfer from position notional and the interval rate, while including trading fees, spreads and liquidation risk. A small funding receipt can be overwhelmed by a modest price movement or execution cost.
What this page does not tell you
Funding is not open interest, a positioning census or a measure of future returns. It also does not guarantee that a visible rate will be applied at the next timestamp: projected rates and contract conditions can change.
Use the live venue display and contract rules for a position decision. MyCoinWay's Funding Rate Scanner is a research view for comparing currently reported rates, not an execution venue or a promise of future settlement.
Before you act
- Confirm the sign convention for the exact venue and contract.
- Record the rate's interval and next funding timestamp.
- Compare the perpetual with the venue's documented reference price.
- Include fees, spread and liquidation risk before acting.
Questions this page answers
Does positive funding mean the price will fall?
No. It describes a funding direction for a venue and interval, not a reliable price forecast.
Can a funding rate change before settlement?
Yes. A displayed or projected rate can change before the applicable funding time under the venue's methodology.
Methodology and limits
This is an educational explanation of perpetual-futures mechanics, not trading advice. Funding formulas, caps, position eligibility and settlement schedules differ by venue and contract. Verify the live contract specification before relying on a rate.