Glossary
Funding Rate
The periodic payment exchanged between longs and shorts in a perpetual futures market to keep the perp's mark price tethered to spot.
Perpetual futures never expire, so there is no natural mechanism forcing their price to converge with spot. The funding rate fixes that: every few hours, longs pay shorts (or vice versa) a small percentage based on how far the perp price has drifted from the index.
If perp > spot, longs pay shorts — which pressures longs to close and shorts to open, pulling the perp back down. The funding rate is the single most-watched on-chain signal of leverage positioning.