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When the funding rate is positive, long position holders pay funding to the short position holders; when the funding rate is negative, short position holders pay funding to the long position holders. To aid readability, the funding rate is expressed as an 8-hour interest rate; however, funding is actually calculated and paid or received continuously and can be seen in real time in the realized session P&L (RSPL).
Fees on funding
Coinbase does not charge any fees on funding. All funding payments are transferred between holders of the perpetual contracts, making funding a zero-sum game.
Premium rate
The calculation begins with the Premium Rate:
Premium Rate = ((Mark Price − Index Price) / Index Price) × 100%
Funding rate
The Funding Rate is calculated from the premium rate by applying a damper and a cap:
If the premium rate is within the −0.025% to 0.025% range, the actual funding rate is reduced to 0.00%.
If the premium rate is lower than −0.025%, the actual funding rate is the premium rate + 0.025%.
If the premium rate is higher than 0.025%, the actual funding rate is the premium rate − 0.025%.
The uncapped funding rate:
Uncapped Funding Rate = Maximum (0.025%, Premium Rate) + Minimum (−0.025%, Premium Rate)
The funding cap varies by instrument and is applied as:
Minimum (Maximum_Cap, Maximum (Minimum_Cap, Uncapped Funding Rate))
The full Funding Rate formula:
Funding Rate = Minimum (Maximum_Cap, Maximum (Minimum_Cap, (Maximum (0.025%, Premium Rate) + Minimum (−0.025%, Premium Rate))))
Time fraction
Time Fraction = Funding Rate Time Period / 8 hours
The actual funding payment is calculated by multiplying the funding rate by the position size and the time fraction:
Funding Payment = Funding Rate × Position Size × Time Fraction
For linear USDC perpetuals, Position Size is the position’s notional value in USDC, not the quantity of the underlying asset.
Instrument parameters
This table covers linear USDC perpetuals.
Funding | Linear (USDC) |
Funding damper | Min −0.025%, Max 0.025% |
Funding cap | Min −5.0%, Max 5.0% |
Example calculations
In reality, the spread between the index and the mark price changes continuously, and all changes are taken into account. The examples below are simplifications of the actual calculations. The funding paid or received is continuously added to the realized session P&L (RSPL) and is moved to or from the cash balance at the daily settlement at 08:00 UTC.
Example 1 (USDC linear): If the SOL Perp mark price is at USDC 100.10 and the index is at USDC 100: Premium Rate = 0.1%; Uncapped Funding Rate = 0.075%. Long position of USDC 100,000 (1,000 SOL) for 1 minute: Funding Payment = 0.075% × 100,000 × 1/480 = 0.15625 USDC.
Example 2 (8-hour holds): Holding the SOL Perp position from Example 1 for 8 hours, with the mark price and index unchanged, results in a funding payment of 75 USDC, paid by longs and received by shorts.
Example 3: If the SOL Perp mark price is USDC 100.10 for 1 minute and USDC 99.90 for the next minute, while the index remains at USDC 100 and the position value remains USDC 100,000, a long position pays 0.15625 USDC in the first minute and receives the same amount in the second. Net funding over the 2 minutes is 0 USDC.
Example 4: If the SOL Perp mark price is within +/−0.025% of the index price, real-time funding is 0.00%.
Example 5 (funding cap): For a linear USDC perpetual, Premium Rate = 7.5% → Uncapped Funding Rate = 7.475% → exceeds cap → Funding Rate = 5.0%. This example uses the standard ±0.025% funding damper.
Funding payment timings
Funding is calculated and paid or received in real time. Account equity immediately reflects any changes due to funding, meaning any funding received is immediately available for trading. However, the cash balance is only updated with funding during the daily settlement at 08:00 UTC every day. Any net funding received over a trading session may be available for withdrawal after the next daily settlement, subject to margin requirements and other applicable restrictions.