Funding
Funding is the periodic payment between perp longs and shorts that keeps the contract anchored to spot. Read as a percentage rate (annualised) it tells you who's paying to hold their position, and crowded one-sided funding is one of the cleanest contrarian signals available.
What funding is, mechanically
Perpetual futures don't expire. To stop the perp price from drifting away from spot indefinitely, every venue runs a periodic settlement (every 1h or 8h depending on venue) where one side pays the other based on the perp-spot premium. When perps trade rich, longs pay shorts; when perps trade cheap, shorts pay longs.
BackQuant displays funding annualised, the per-period rate scaled to a yearly carry. A funding APR of +20% means longs are paying ~20% per year (in fees) for the privilege of being long perp at this premium. That's real money for any position held more than a few hours.
How to read it
- Funding APR around 0%, neutral. Perp tracks spot. No directional information.
- Funding APR > +10%, longs paying noticeably. Bullish positioning, but expensive to hold. Crowded.
- Funding APR > +30%, extreme crowding. Historical mean-reversion signal. Either spot rallies past the perp premium (longs get vindicated) or the position unwinds violently as paying carry stops being worth it.
- Funding APR < −5%, shorts paying. Means shorts are crowded enough that they're willing to pay carry. Often coincides with capitulation lows; a short squeeze commonly follows.
The carry monitor
The pro terminal's carry panel pairs funding rate with the perp-spot basis to compute the actual carry trade economics: short perp + long spot earns the funding payment as a yield. The panel surfaces:
- Annualised funding APR, the carry yield itself.
- Perp-spot basis, the perp price minus spot, as a percentage. Positive = perp rich, negative = perp cheap.
- Combined carry estimate, the net yield from holding the short-perp / long-spot pair, accounting for both legs.
The funding term structure
The term-structure panel shows current funding alongside historical 7-day, 30-day, and 90-day percentile bands. Reading the current rate against its own history is much more actionable than the raw number. A +12% APR is normal for BTC during a strong bull leg and extreme during chop, the term-structure view tells you which regime you're in.
- FUNDFunding rate panel, current + history.
- CARRYCarry monitor, funding + basis combined.
- FUNDTERMFunding term structure, current vs 7/30/90d bands.
- STUDYStudy panel with funding as the sub-pane (price-aligned).