Funding Rate

Funding rates are a way to keep the price of a perp contract in line with the reference price of the asset.

Every hour, traders on one side of the market (either longs or shorts) pay a small fee to the other side — depending on whether the contract is trading above or below the actual price of the asset. If the perp is priced higher than the spot price, longs pay shorts. If it’s lower, shorts pay longs.

These payments go directly between traders – Ventuals doesn’t take a cut – and they help keep the market balanced by nudging prices back towards the reference price.