What is Funding Rate?
Since perpetual futures do not have defined end dates, a price-anchoring method called a “funding rate” is established. It provides regular payments between buyers and sellers.
#Fundingrate #Perpetualfutures #zenith #Defi #tezos #web3community
Since perpetual futures do not have defined end dates, a price-anchoring method called a “funding rate” is established. It provides regular payments between buyers and sellers.
#Fundingrate #Perpetualfutures #zenith #Defi #tezos #web3community
The funding rate balances short and long positions by incentivizing a market balance. It’s like a rebate or fee to keep the market balanced.
The funding rate mechanism helps ensure the perpetual derivative contract price is close to the spot price. Exchanges use an oscillating price marker to determine if the longs or shorts need to pay fees or receive rebates.
The funding rate is positive when the perpetual derivative price is above the spot price.
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