Funding rate explained: who pays whom, and what it tells you

Paying to stay in the trade

A perpetual never expires, so something has to keep its price from drifting away from the coin's. That something is funding. At set times — every 8 hours on Binance's BTCUSDT, at 00:00, 08:00 and 16:00 UTC — holders of one side pay holders of the other. Positive funding: longs pay shorts. Negative: shorts pay longs. The exchange takes nothing; it only passes the money across.

The payment is the rate times the position's value. At +0.01%, a $10,000 long pays $1 and a $10,000 short receives $1.

How Binance sets the rate

Binance publishes the formula: funding = premium index + clamp(interest rate − premium index, −0.05%, +0.05%). The interest part is fixed at 0.01% per 8 hours. The premium index measures how far the perpetual trades above or below its index, at the prices a modest market order would get.

The clamp has a simple effect: while the premium stays between −0.04% and 0.06%, funding is exactly 0.01%. Only when the perpetual trades well above the index does funding rise above it — and only well below does it fall under it, or below zero.

All of 2026, payment by payment

Funding — every funding payment of Binance's BTC perpetual from 1 January to 27 October 2026: 900 payments. The rate was exactly 0.01% 63 times, never higher, and below zero 228 times; the lowest was −0.0152%. A $10,000 long held all year would have paid $251.00 in funding; over the last 30 days, $34.64.

Why so low? From 19 February, the premium index was below −0.04% in 4,409 of 6,009 hours — the perpetual mostly traded a little below its index, so the formula kept funding under 0.01%.

Check yourself · 1 of 3Funding is +0.01% and you hold a $20,000 short. What happens at the next funding time?

AYou pay $2BYou receive $2CNothing — only longs are affected

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Positive funding: longs pay shorts. 0.01% of $20,000 is $2, paid by longs and received by you.

Check yourself · 2 of 3The perpetual trades far above its index for hours. What happens to funding?

AIt rises above 0.01%, and holding a long costs moreBIt falls below zeroCIt stays at 0.01% whatever happens

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A high premium pushes funding up; longs pay more, which makes holding them expensive and pulls the price back toward the index.

Check yourself · 3 of 3Why was BTC funding so often exactly 0.01% or a little below it in 2026?

ABinance fixed it by handBThe formula sets it at 0.01% while the premium stays between −0.04% and 0.06%, and the premium was mostly a little below thatCNobody traded the perpetual

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The clamp pins funding to the 0.01% interest component in that band; with the premium below −0.04% most of the time, funding sat under it.

Takeaways

1. Funding is paid between longs and shorts every 8 hours on BTCUSDT; positive means longs pay.
2. Binance's formula sets funding at 0.01% while the premium stays between −0.04% and 0.06%.
3. In 2026 BTC funding never went above 0.01% and was negative a quarter of the time.
4. Read funding against the coin's own history, not against fixed "extreme" levels.

Open the BTC perpetual in the terminal — funding is in the Market tab

Further reading

• Introduction to Binance Futures funding rates — Binance Futures ↗
• What are mark price and price index — Binance Futures ↗