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What Components Determine the Calculation of the Funding Rate?

Funding rate equals a base interest rate plus a variable premium that reflects the futures vs. spot price gap.
Greeks.Live24.11.25

What Components Determine the Calculation of the Funding Rate?

The funding rate is typically composed of two main components: the interest rate and the premium. The interest rate component is usually a fixed rate determined by the interest rate differential between the base and quote currencies.

The premium component accounts for the price difference between the perpetual contract and the underlying spot price. It fluctuates based on market demand, increasing when the perpetual trades at a premium and decreasing when it trades at a discount, directly reflecting the cost of maintaining a leveraged position.

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