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What is Funding?

Funding​

Funding determines the cost of holding a perpetual position. It is calculated hourly and helps maintain price equilibrium between the perpetual contract and the underlying asset's spot price.

Funding is not a Gem Wallet fee. It is a peer-to-peer transfer between traders.

Funding APR​

Funding APR is the annualized rate at which longs pay shorts, or if the rate is negative, shorts pay longs.

Gem Wallet annualizes the hourly funding value by multiplying it by 24 hours and 365 days, then displays the result as a percentage.

Positive Funding APR Market Example

What Positive and Negative Mean​

A positive Funding APR means long positions pay short positions. A negative Funding APR means short positions pay long positions.

Negative Funding APR Market Example

Funding Payment​

Funding payments are periodic payments between perpetual traders. They help keep the perpetual contract price close to the underlying asset's spot price.

Positive funding means long positions pay short positions. Negative funding means short positions pay long positions.

Funding Payment Example on BTC Funding Payment Example on BTC

How It Affects a Position​

Funding can increase or decrease your position margin over time, depending on your position direction and whether the funding rate is positive or negative.