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What Is the “Interest Rate Component” in Some Funding Rate Calculations?

A fixed percentage representing the implicit cost of borrowing/lending, added to the basis calculation in the funding rate formula.
Greeks.Live21.11.25

What Is the “Interest Rate Component” in Some Funding Rate Calculations?

The Interest Rate Component is a small, fixed percentage included in the funding rate formula on some exchanges. It represents the implicit cost of borrowing or lending the base or quote asset.

This component ensures that the funding rate reflects not just the price difference (basis) but also a standardized market interest rate, further tethering the perpetual price to the spot price.

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