—
title: “How to Calculate Funding Rate APR (With Free Calculator)”
slug: “calculate-funding-rate-apr”
author: “Hasnain Ali”
date: 2026-07-02
category: funding-arbitrage
tags: [funding-rate, calculator, apr, tutorial]
schema_type: HowTo
reading_time: 6
—
# How to Calculate Funding Rate APR
Funding rate is quoted **per funding window** (usually 8 hours). But when
comparing opportunities, you need **APR** (annualized percentage rate).
This guide shows you how to convert.
## The Basic Formula
“`
APR = Funding Rate per Window × Windows per Year
“`
**For 8-hour funding (most CEXes):**
“`
APR = Funding Rate (8h) × 3 × 365 = Funding Rate (8h) × 1095
“`
**Example:**
– BTC funding: +0.01% per 8h
– APR: 0.01% × 1095 = **+10.95% APR**
**For 1-hour funding (Hyperliquid, dYdX):**
“`
APR = Funding Rate (1h) × 24 × 365 = Funding Rate (1h) × 8760
“`
**Example:**
– HYPE funding: +0.012% per 1h
– APR: 0.012% × 8760 = **+105.12% APR**
⚠️ **Warning:** 1h funding **compounds**. The actual realized APR over 24h
is lower than the simple multiplication. See below.
## The Compounding Problem
The basic formula is a **simple multiplication**. But when funding is paid
every hour (or every 8h), the **next funding payment is on the new balance**
(if reinvested).
**The compounding formula:**
“`
Effective APR = (1 + Rate per Period)^Periods per Year – 1
“`
**Example for 1h funding:**
– Rate per 1h: 0.012%
– Periods per year: 8760
– Effective APR: (1 + 0.00012)^8760 – 1
– = 1.00012^8760 – 1
– = ~e^(0.12 × 8.76) – 1
– = ~190% APR (compounded)
But if funding rate **changes** every period, the realized APR is usually
between the simple and compounded estimate.
## Real-World Calculator
Use this Python snippet:
“`python
def funding_apr(rate_per_window, hours_per_window=8, compound=False):
windows_per_year = (365 * 24) / hours_per_window
if not compound:
return rate_per_window * windows_per_year
else:
return (1 + rate_per_window / 100) ** windows_per_year – 1
# Example: 0.01% per 8h
print(funding_apr(0.01))
# Output: 0.1095 (10.95% APR)
# Example: 0.012% per 1h (compounded)
print(funding_apr(0.012, hours_per_window=1, compound=True))
# Output: 1.92 (192% APR compounded)
“`
## Funding Rate Realized Return (Not Theoretical)
The **theoretical** APR assumes funding rate stays constant. In reality, it
fluctuates. The **realized** APR over 30 days is:
“`
Realized APR = Total Funding Collected / Position Size × (365 / Days Held)
“`
**Example:**
– Position: $10,000 long BTC
– 30 days of funding: $40 collected
– Realized APR: 40/10000 × (365/30) = 4.87% APR (vs 10.95% theoretical)
This is why **historical funding rate** matters more than current quote.
## How Funding Alerts Calculates APR
Our screener shows **three** APRs for every pair:
1. **Current APR** = today’s funding × windows/year (simple)
2. **7-day Avg APR** = average of last 7 days
3. **30-day Avg APR** = average of last 30 days
**Use 7-day Avg APR** for short-term trades. **Use 30-day Avg APR** for
position trades.
## Funding Rate Calculator (Web)
Visit the [Funding Rate Calculator](/tools/funding-rate-calculator/) on
Funding Alerts to convert any funding rate to APR in real time.
### Quick Reference Table
| Funding (8h) | APR (Simple) | Funding (1h) | APR (Simple) | APR (Compounded) |
|————–|————–|————–|————–|——————|
| +0.001% | +1.10% | +0.001% | +8.76% | +9.13% |
| +0.005% | +5.48% | +0.005% | +43.80% | +49.65% |
| +0.01% | +10.95% | +0.01% | +87.60% | +107.43% |
| +0.05% | +54.75% | +0.05% | +438.00% | +1231% |
| +0.1% | +109.50% | +0.1% | +876.00% | +6680% |
⚠️ Anything above +50% APR (8h basis) is **unusually high** and usually
indicates a short-term imbalance. Use the screener to see the historical
context.
## Common Mistakes in APR Calculation
1. **Forgetting to multiply by 3** — funding paid every 8h = 3x per day = 1095x per year
2. **Confusing per-window with per-day** — 0.01% per 8h ≠ 0.03% per day (well, it does, but watch your multiplication)
3. **Assuming constant funding** — funding rate changes. Use historical averages.
4. **Ignoring compounding** — for 1h funding, the difference between simple and compounded is significant
5. **Not subtracting fees** — taker fees of 0.05% × 2 = 0.1% per round-trip = ~36% APR drag if you’re trading frequently
## Summary
– **Simple APR** = rate per window × windows per year
– **Compounded APR** = (1 + rate)^windows – 1
– **Realized APR** = what you actually earned
– **Funding Alerts** shows current + 7-day + 30-day averages
For more on funding rate strategies, see [Top 10 Funding Rate Arbitrage
Strategies](/top-funding-rate-arbitrage-strategies-2026/).
—
*Not financial advice. Funding rate calculations are for educational
purposes only.*
—
### Explore by Coin
– [Hyperliquid (HYPE) Funding Rate](/hyperliquid-hype-funding-rate/)
– [Sui (SUI) Funding Rate](/sui-funding-rate/)
– [Arbitrum (ARB) Funding Rate](/arbitrum-arb-funding-rate/)
– [Optimism (OP) Funding Rate](/optimism-op-funding-rate/)
– [Toncoin (TON) Funding Rate](/toncoin-ton-funding-rate/)
– [Aptos (APT) Funding Rate](/aptos-apt-funding-rate/)
### Explore by Exchange
– [Hyperliquid Funding Rates](/hyperliquid-funding-rates/)
– [dYdX Funding Rates](/dydx-funding-rates/)
– [GMX Funding Rates](/gmx-funding-rates/)
– [Kraken Funding Rates](/kraken-funding-rates/)
– [KuCoin Funding Rates](/kucoin-funding-rates/)
### Tools & Resources
– [Funding Rate Glossary](/funding-rate-glossary/)
– [Binance vs Bybit Funding Rates](/binance-vs-bybit-funding-rates/)
– [Bybit vs OKX Funding Rates](/bybit-vs-okx-funding-rates/)
– [Our Methodology](/methodology/)
What is funding rate to apr?
Converting a funding rate to an annual percentage rate (APR) helps traders compare the cost of holding perpetual positions across assets and timeframes. Understanding the differences helps traders choose the right venue and strategy for their risk profile.
How to compare funding rates across platforms
When evaluating funding rates across different platforms, consider the funding interval (8h vs 1h vs continuous), the settlement mechanism, and the base rate. A rate of 0.01% per 8 hours equals approximately 0.03% per day or 10.95% APR. Always normalize to the same timeframe before comparing.
Key differences and trade-offs
Each platform has different liquidity, fee structures, and liquidation engines. Centralized exchanges typically offer deeper liquidity and faster execution, while decentralized exchanges offer self-custody and transparency. Funding rates on DEXs can be more volatile due to thinner order books, creating both opportunities and risks.
👉 See the live TON funding rate page for full cross-exchange data.