What Is a “Funding Rate” in Perpetual Futures and How Is It Paid Using Stablecoins?

The funding rate is a small, periodic payment between traders designed to keep the perpetual contract's price anchored to the underlying asset's spot price. If the contract trades above the spot price, long position holders pay a positive funding rate to short position holders, and vice versa.

This rate is calculated based on the difference between the contract's price and the spot price, and the actual payment is executed using the stablecoin that is used for margin and settlement. The stablecoin ensures the payment value is predictable.