Gate.io Education | What Are Funding Rates?

2024-12-20, 09:40

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Funding rates are fees set by cryptocurrency exchanges to ensure that the prices of perpetual contracts maintain a balance with the prices of the underlying assets. They serve as a mechanism for the exchange of funds between long and short traders, and are not collected by the exchange; instead, they adjust the costs or returns for traders holding contracts. Funding rates encourage contract prices to revert to the prices of the underlying assets, especially when contract prices deviate from spot prices.
When market trends are bullish, funding rates are typically positive and tend to increase over time, meaning that longs pay funding fees to shorts. Conversely, when the market is bearish, funding rates are negative, with shorts paying fees to longs. If the funding rate is 0.00%, no settlement of funding fees is required. Funding rates are usually calculated based on the market interest rate and the difference between the contract price and the underlying asset price, and they are settled at fixed intervals (such as every 8 hours or every hour), with traders exchanging funding fees.
# Gate.io Contract Funding Rates
Gate.io contracts utilize a fixed rate, assuming that the return rate on holding cash-equivalent assets is higher than that of holding cryptocurrency assets. By default, the daily interest rate is fixed at 0.03%, divided into three 0.01% rates (charged every 8 hours).
At the top of the personal trading interface on the Gate.io perpetual contract platform, users can view the current funding rate and a countdown to the next payment time.
By clicking on the <a href="https://www.gate.io/zh/futures/introduction/funding-rate-history?from=USDT-M," target="_blank" title="">https://www.gate.io/zh/futures/introduction/funding-rate-history?from=USDT-M,</a> users can learn about the historical funding rates for all cryptocurrencies on Gate.io.
![](https://gimg2.gateimg.com/image/article/1734687899gateen.png)
In the <a href="/price" target="_blank" class="blog_inner_link">cryptocurrency market</a>, funding rates are an important component of perpetual futures contracts. They effectively maintain the parity between perpetual contracts and the spot prices of underlying assets, encourage market participation, and provide insights into market sentiment. By understanding how funding rates operate and their practical application, traders can make more informed decisions and effectively manage their positions.
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<div>Author: **Icing**, Gate.io Researcher
<div class="info-tips">\*This article represents only the views of the researcher and does not constitute any investment suggestions. Investment involves risks and users need to make careful decisions.
<div>\*Gate.io reserves all rights to this article. Reposting of the article will be permitted provided Gate.io is referenced. In all cases, legal action will be taken due to copyright infringement.
</div>

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