What Is the “Funding Rate” in a Perpetual Swap and Why Does It Matter for Manipulation?

The funding rate in a perpetual swap is a periodic payment exchanged between the long and short position holders, designed to keep the swap price anchored to the underlying spot price. It matters for manipulation because a manipulator can use large, temporary trades to drive the perpetual swap price away from the spot price, causing the funding rate to swing significantly.

They can then profit by holding a position that receives the high funding rate, or by using the predictable rate change to inform a profitable trade on the spot market.