Funding Rate Arbitrage Guide

Funding Rate is a payment on perpetual futures. Perps do not expire, so exchanges use funding to keep the perp price close to spot or index price. At each funding event, one side pays and the other side receives.

• Positive funding usually means long pays short.
• Negative funding usually means short pays long.
• Funding is paid on a schedule set by the exchange, and the rate can change before the payment.

Funding opportunities usually appear on perp pairs with strong demand on one side. Traders check public tools, exchange funding pages, new futures listings and dashboards that compare funding across exchanges.

• Public screeners can show broad funding rates, but often miss smaller or new pairs.
• New futures pairs can have unstable funding and better short-lived opportunities.
• A dashboard is useful when it shows route, rates, timing and liquidity together.

There are three basic ways traders try to earn from funding. They are not equal in risk. The more hedge you remove, the more price risk you take.

• Spot hedge: buy spot and short perp when positive funding pays shorts. Usually the safest version.
• Futures hedge: long one perp and short another perp on a different exchange. This is the cross-exchange setup.
• No hedge: enter only for funding and hope price stays in range. This is the riskiest version.

Example: OKX has -0.50% funding and Binance has -0.10% on the same perp. A long on OKX receives about 0.50%, while a short on Binance pays about 0.10%. The difference is the funding edge before fees, slippage and price differences between exchanges.

• Open long on the exchange where negative funding pays long.
• Open short on another exchange to reduce price direction risk.
• Enter only if net funding is larger than fees, slippage and exit cost.