How funding is calculated
At each funding timestamp the exchange multiplies the position's notional value โ contracts ร mark price, not your margin โ by the funding rate. With a positive rate longs pay and shorts receive; with a negative rate it is the other way round. The money moves between traders; the exchange does not keep it. If you close the position before the timestamp, you neither pay nor receive for that interval.
The rate itself is set from the gap between the perpetual's price and the spot index plus a small interest component; the common baseline of 0.01% per 8 hours is that interest part. In hot markets rates can reach 0.1% per interval or more, which annualises to over 100%.
funding per payment = notional ร rate
payments = holding hours รท interval
annualised = rate ร (24 รท interval hours) ร 365Worked example
A $10,000 long BTC perpetual at 0.01% per 8 hours pays $1 per payment, three times a day. Over 30 days that is 90 payments and $90 โ 0.9% of the notional. If the position is opened with $1,000 of margin (10ร), the funding takes 9% of the margin in a month, so the price must rise 0.9% just to cover it. At a rate of 0.05% the same position would pay $450.
Using funding in decisions
- Holding a leveraged position for weeks: compare the expected move with the projected funding before you open.
- Cash-and-carry: a short perp hedged with spot holdings earns funding while rates are positive โ but rates change every interval and can flip.
- Different venues pay different rates for the same coin; the interval matters too, since 1-hour funding compounds the effect of spikes.
- Funding is separate from trading fees and from liquidation risk โ check those with the position size and liquidation price calculators.
Frequently asked questions
+Who receives the funding?
The opposite side of the market. When the rate is positive, longs pay shorts; when negative, shorts pay longs. The exchange only transfers it.
+Is funding charged on margin or on the position?
On the position's notional value. Leverage multiplies the cost relative to your margin.
+Do I pay funding if I close before the timestamp?
No. Funding is exchanged only for positions open at the funding time.
+Why does my exchange show a different annualised rate?
Some show the simple annualised figure (rate ร payments per year), others the predicted next rate. This tool uses the simple version; rates are not constant, so treat any annual figure as a snapshot.
+Does spot buying have funding?
No. Spot holdings and instant swaps like KOT.CASH have no funding; you own the coin.
Calculations run entirely in your browser; nothing you type is sent to KOT.CASH. Results are estimates for information only and are not financial, tax or legal advice.