The funding fee formula
At every funding settlement, each open position pays or receives:
Funding fee = position size (notional) × funding rate
- Position size (notional) is the number of contracts × the mark price. It is the full value of the position, not the margin you put up.
- Funding rate is the rate for that settlement, shown on the exchange as a percentage per interval.
- Positive rate: longs pay and shorts receive. Negative rate: shorts pay and longs receive.
The money passes between traders. The exchange does not keep it. For why funding exists at all, read funding rate explained.
Why leverage makes funding expensive
Because funding is charged on the notional value, leverage multiplies its cost relative to your margin. The same rate costs ten times more of your margin at 10× than at 1×.
Example: you open a $10,000 long with $1,000 of margin (10× leverage). Funding is +0.01% per 8 hours. Each settlement costs $10,000 × 0.0001 = $1. Over a day (three settlements) that is $3, which is 0.3% of your margin. At +0.10% funding the same position pays $10 per settlement, or $30 a day, which is 3% of your margin every day.
8h, 4h and 1h funding intervals
Most Binance perpetuals settle every 8 hours, at 00:00, 08:00 and 16:00 UTC. Some coins settle every 4 hours or every hour, especially during volatile periods. Count the settlements per day before you compare costs:
| Interval | Settlements per day | Daily cost at 0.01% on $10,000 |
|---|---|---|
| 8 hours | 3 | $3 |
| 4 hours | 6 | $6 |
| 1 hour | 24 | $24 |
The same quoted rate on a 1-hour coin costs eight times more per day than on an 8-hour coin. CryptoScanX shows each coin’s interval next to its funding rate, and the coin pages show the 30-day average.
Turning funding into a yearly rate
To compare funding with other costs, annualise it: rate × settlements per day × 365. A steady +0.01% every 8 hours is 0.01% × 3 × 365 ≈ 11% a year of the position’s value. That is the background cost of holding a leveraged long when funding sits at the usual baseline.
When you pay and when you don’t
- You only pay or receive funding if your position is open at the settlement time. Close a second before and nothing is exchanged.
- The rate shown before settlement is an estimate that updates through the interval. The final rate is fixed at settlement.
- Funding is settled in the margin asset (USDT for USDT-M perpetuals) and appears in your transaction history as a funding fee.
Common mistakes
- Calculating on margin. Funding uses the full position size, so a 20× trade pays twenty times what the margin suggests.
- Ignoring the interval. A coin that switched to 1-hour funding can cost far more per day than its rate suggests.
- Assuming the rate is fixed. It changes every interval, so a trade held for a week can pay very different amounts on different days.
To find coins where funding is extreme right now, use the funding rate scanner.
Free live tools
- Funding rate history: every payment for any coin over 30 days, with totals and the annualised rate.
- Delta Exchange funding rate live: every Delta perpetual ranked by funding.
Frequently asked questions
Is funding charged on margin or position size?
On position size, the full notional value of the position (contracts × mark price). Leverage therefore multiplies the funding cost relative to your margin.
How do I calculate the funding fee?
Multiply your position size by the funding rate for that settlement. A $10,000 position at 0.01% pays or receives $1 per settlement.
Does the exchange keep the funding fee?
No. Funding is paid directly between longs and shorts. The exchange only charges its normal trading fees.
How often is funding charged?
Usually every 8 hours on Binance, at 00:00, 08:00 and 16:00 UTC. Some perpetuals settle every 4 hours or every hour.
Crypto futures are leveraged and carry a high risk of loss. This guide is educational and is not investment advice.