> For the complete documentation index, see [llms.txt](https://flipper-3.gitbook.io/flipper-docs/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://flipper-3.gitbook.io/flipper-docs/flipper-trading/funding-rate.md).

# Funding Rate

## <mark style="color:$primary;">Overview</mark>

The Funding Rate is a periodic payment mechanism used by perpetual futures markets to help keep contract prices aligned with the underlying market.

Funding payments are exchanged between long and short traders according to the rules of the underlying execution venue.

## <mark style="color:$primary;">How Funding Works</mark>

| <mark style="color:$primary;">**Funding Rate**</mark> | <mark style="color:$primary;">**Long Positions**</mark> | <mark style="color:$primary;">**Short Positions**</mark> |
| ----------------------------------------------------- | ------------------------------------------------------- | -------------------------------------------------------- |
| **Positive**                                          | Pay                                                     | Receive                                                  |
| **Negative**                                          | Receive                                                 | Pay                                                      |

## <mark style="color:$primary;">Why Funding Matters</mark>

Funding affects the cost of holding a leveraged position.

Even if the market price remains unchanged, funding payments may increase or reduce your overall PnL.

Flipper considers the funding rate as one of several factors when evaluating routes across supported execution venues.

{% hint style="warning" %}
Always review the current funding rate before opening positions intended to remain open for an extended period.
{% endhint %}