Positive vs Negative Funding Rate: What It Means
The funding rate is the periodic payment that keeps perpetual contract prices close to the price of the coin. It can be positive or negative, and knowing how to read the sign is the basis for understanding any arbitrage opportunity.
Positive funding
When funding is positive, longs pay shorts. This usually happens when the perpetual's price is above the price of the coin, which shows more people wanting to buy than to sell.
The payment discourages buying and encourages selling, helping the contract price return to near the spot price. Shorts receive.
Negative funding
When funding is negative, it's the other way around: shorts pay longs. It's common when the market is pessimistic and many people are selling the contract. Longs get paid to hold the position.
Negative funding can also be an opportunity: if you are long where funding is negative, you receive. The trick in arbitrage is to combine two legs that both receive, or where what you receive exceeds what you pay.
How arbitrage uses both signs
Each exchange calculates its own funding. On the same coin, one can have positive funding and another negative, or both positive but with different values. If you are long on the one with the lower (or negative) funding and short on the one with the higher, you receive the difference.
- Funding A = +0.05% and funding B = +0.01%: short on A (receive 0.05%) and long on B (pay 0.01%). Net: +0.04% per payment.
- Funding A = +0.03% and funding B = −0.02%: short on A (receive 0.03%) and long on B (receive 0.02%). Net: +0.05% per payment.
These are illustrative examples, before fees and spread. See the full calculation in how to calculate funding profit.
What can turn against you
Funding changes with every payment. A coin that used to pay well can turn negative for your side. That's why the payment history matters, and the Multi Arbitrage Prospector filters for coins with consistent payments. It's also useful to set an exit rule for runs of negative payments.
An example of signs on different exchanges
| Coin | Exchange A | Exchange B | Best combination |
|---|---|---|---|
| XYZ | +0.060% | +0.010% | Short on A (receive 0.060%), long on B (pay 0.010%) |
| ABC | +0.030% | −0.020% | Short on A (receive 0.030%), long on B (receive 0.020%) |
| DEF | −0.015% | −0.040% | Long on B (receive 0.040%), short on A (pay 0.015%) |
Illustrative values per payment, before fees and spread.
How to follow funding day to day
Exchanges show the current funding, the predicted funding and the time of the next payment on the contract page. The Multi Arbitrage cards bring this together for all 14 exchanges and show the history of the latest payments, which helps tell a passing funding rate from a consistent one.
Related guide: what the funding rate is. See also all the crypto arbitrage guides.
Frequently asked questions
Is negative funding good or bad?
It depends on which side your position is on. For longs, negative funding means receiving. For shorts, it means paying.
How often is funding paid?
It varies by exchange and by coin: every 1, 4 or 8 hours. See funding intervals.
Is the predicted funding the same as the amount paid?
Not always. The predicted rate is an estimate that can change until the payment time. The system checks the amount actually paid against the exchange statement.
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Funding Intervals: 1h, 4h or 8h Explained
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How to Calculate Funding Arbitrage Profit
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High Funding Rate: Opportunity or Trap?
A very high funding rate grabs attention but can hide risk. See the warning signs: low liquidity, volatility, spread and funding that disappears.
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This content is for information only and is not investment advice. Trading crypto derivatives involves a high risk, including the total loss of your capital. Past results do not guarantee future results, and the figures mentioned are examples. Before trading, check whether trading crypto derivatives is allowed in your country and what your tax obligations are. Assess whether the product suits your profile before investing.