Funding rate
A periodic payment between long and short perp holders that anchors perpetual price to spot.
When perp price > spot, longs pay shorts (positive funding); when below, shorts pay longs. The basis trade and synthetic-dollar designs like USDe earn the long-side payment when funding stays structurally positive. Negative-funding regimes ("funding flips") reverse that flow and are the dominant first-order risk for these strategies.
Related terms
- Basis tradeLong spot + short perpetual (or futures) to harvest the funding-rate differential, structurally close to delta-neutral.
- USDeEthena's synthetic dollar — collateralised by LSTs / LRTs hedged with short ETH perps.
- Perpetual (perp)A futures contract with no expiry, kept anchored to spot via the [[funding-rate]].
- Delta-neutralA position where price-sensitivity to the underlying asset nets to zero — long spot offset by short derivative.