What is the Funding Rate in Crypto Futures?
Funding Rate is a periodic fee charged to Long or Short traders in Crypto Futures contracts. The purpose of the Funding Rate is to keep the contract price close to the original asset price (spot price). This fee is not paid to the platform, but is passed between traders. This funding rate will be paid every 8 hours.
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Positive Funding Rate: When the price of Crypto Futures rises above the spot price, then the trader who has a Long position will pay to the trader who has a Short position.
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Negative Funding Rate: When the price of Crypto Futures falls below the spot price, then the trader who has a Short position will pay to the trader who has a Long position