Funding rate

When the contract trades above spot (more demand for longs), longs typically pay shorts; when it trades below spot, shorts pay longs. The payment recurs on a fixed schedule, commonly every 8 hours.

For example, an 8-hour funding rate of 0.01% on a $10,000 position costs $1 for whichever side is paying, each period. If that rate held constant across all three 8-hour periods in a day, the daily cost would be about $3, or 0.03% of the position's value.

A common mistake is holding a large leveraged perpetual position for weeks without accounting for funding costs. Even if price barely moves, funding payments can accumulate into a meaningful drag on returns over time.