Funding Rate Explained: Who Pays, When and How Much
The funding rate on perpetual futures explained: why it exists, who pays whom, how to calculate it, when it is charged, and how it affects a tournament result.
If you trade perpetual futures, there is a cost (or income) that does not show up as a fee: the funding rate. It is small per period, easy to forget and — over days and weeks — large enough to move a result.
Why funding exists
A perpetual contract never expires, so nothing forces its price to meet the spot price the way an expiring future does. Funding does that job: a periodic payment between longs and shorts that pulls the perp price toward the spot index.
- Perp above spot → funding positive → longs pay shorts.
- Perp below spot → funding negative → shorts pay longs.
The exchange does not keep funding; it moves between traders.
How it is calculated
Funding payment = position notional × funding rate
Notional is the size of the position at the mark price — not your margin. That is why leverage matters: a bigger position pays or receives proportionally more.
| Position | Rate | Payment |
|---|---|---|
| Long 100,000 | +0.01% | pays 10 |
| Short 100,000 | +0.01% | receives 10 |
| Long 300,000 | −0.02% | receives 60 |
| Short 50,000 | −0.02% | pays 10 |
When it is charged
Funding is exchanged at fixed funding times — on major Binance perpetuals usually every 8 hours. You pay or receive it only if you hold a position at that moment. Open after and close before the next funding time, and funding does not touch you.
What it means for your result
- Short formats: often zero or one funding time — usually a minor factor.
- Long formats: in a month-long or quarterly tournament, a position held in one direction collects every funding time. At +0.01% three times a day, a 100,000 long pays roughly 30 a day, about 900 a month — almost 1% of a 100,000 bankroll.
- Crowded trades cost more. When everyone is long, funding rises and longs pay more. Funding is a sentiment signal as well as a cost.
Funding on PnL World
Tournaments on PnL World use perpetual markets — BTC, ETH, SOL, XRP and BNB — with funding applied as on the exchange: at the market's funding times, using the market's funding rate, on every open position. Funding is part of your result equity, together with fees and open positions counted at the mark price. See the official rules and how results are scored.
FAQ
Is funding a fee? No. It is a transfer between longs and shorts; the exchange does not keep it.
Can funding make money? Yes — if you are on the receiving side at funding times.
Does funding depend on my leverage? It depends on your position size. Leverage lets you hold a larger position, so indirectly yes.
Do spot positions pay funding? No. Funding applies to perpetual futures.
PnL World tournaments are simulated: trades are executed against live market data, but no real-money positions are opened on any exchange. Nothing here is financial advice.
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