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August 30, 2026SafeArbitrage Research

What is a funding rate, and where does the money come from?

Perpetual futures never expire, so exchanges use a funding rate instead. That payment, settled every eight hours between traders, is the entire source of the yield in a delta-neutral basis trade.

funding rate
perpetual futures
delta neutral

2026-08-31

How is the funding rate calculated? The formula, and three ways people get it wrong

Funding = premium index + clamp(interest − premium), then divided by 8/N. That has been Binance's formula since September 2025; the three things people get wrong are the settlement interval, the multiplier base, and the annualisation factor.

funding rate
perpetual futures
funding rate formula
annualised yield

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