The funding rate determines the recurring payments exchanged between long and short positions in a perpetual futures market. These payments help keep the contract’s price close to the underlying asset’s spot price. When the perpetual contract trades above spot, longs generally pay shorts; when it trades below spot, shorts generally pay longs. Funding can therefore be a cost or a source of income, separate from any profit or loss from price movements. Learn how perpetual futures work or explore Solflare’s trading tools.