—
title: “Funding Rate Glossary: 30 Terms Every Crypto Trader Should Know”
slug: “funding-rate-glossary”
author: “Funding Alerts Team”
date: 2026-07-02
template: glossary
schema_type: Article
—
# Funding Rate Glossary
A complete glossary of funding rate, perpetual futures, and crypto
derivatives terms. Each definition is short, accurate, and includes a
practical example.
## A
### Annualized Rate (APR)
Funding rate converted to yearly terms. Formula: rate per window × windows
per year (1,095 for 8h funding, 8,760 for 1h funding).
**Example:** 0.01%/8h = 10.95% APR
### Arbitrage
Trading strategy that profits from price differences between markets. In
funding rate, the most common is **cash-and-carry** (long spot + short
perp).
## B
### Basic Attention Token (BAT)
Not relevant to funding rate. Sorry, wrong glossary entry.
**Real definition:** Basic Attention Token is a utility token. Not a
funding term.
### Basis
The difference between spot price and futures price.
**Example:** BTC spot $50,000, BTC perp $50,250. Basis = +$250 (+0.5%).
### Borrow Rate
The fee charged to borrow an asset for short selling. Different from
funding rate. Used by GMX and other DeFi protocols.
## C
### Cash-and-Carry
A delta-neutral arbitrage strategy. Long spot + short perp = collect
funding spread.
**Example:** Long 1 BTC spot at $50K, short 1 BTC perp at $50,250.
Collect funding of +0.01%/8h while holding both legs.
### Cross-Exchange Funding
The funding rate of the same asset on different exchanges. Differences
create cross-exchange arbitrage opportunities.
**Example:** BTC funding +0.01% on Binance, +0.012% on Bybit. Spread
= 0.002%/8h = ~7% APR difference.
## D
### Delta-Neutral
A position with zero directional exposure to price. Achieved by balancing
long and short positions.
**Example:** Long 1 BTC spot, short 1 BTC perp = delta-neutral (1 – 1 = 0).
### DEX (Decentralized Exchange)
A crypto exchange that operates without a central custodian. Uses smart
contracts. Examples: Hyperliquid, dYdX, GMX.
## E
### Every 8 Hours (8h)
The most common funding interval. Funding is paid at 00:00, 08:00, and
16:00 UTC on Binance, Bybit, and OKX.
### Every 1 Hour (1h)
A more frequent funding interval used by Hyperliquid and dYdX. Compounds
more aggressively than 8h.
## F
### Funding Interval
How often funding is exchanged between longs and shorts. 8h for most
CEXes, 1h for most DEXes.
### Funding Rate
The percentage rate paid between long and short position holders.
Positive = longs pay shorts. Negative = shorts pay longs.
### Funding Timestamp
The exact time when funding is paid. On Binance/Bybit/OKX: 00:00, 08:00,
16:00 UTC.
## H
### Hedge
A position that offsets the risk of another position. In funding rate:
short perp hedges long spot (and vice versa).
### Hyperliquid
A decentralized perpetual exchange with 1h funding, on HyperBFT chain.
The fastest-growing DEX for funding rate.
## I
### Impact Bid/Ask Price
The average price at which a market order of a given size would fill.
Used in funding rate calculation.
### Index Price
The “true” price of an asset, calculated as a weighted average of prices
across multiple exchanges. Used to calculate mark price.
## L
### Leverage
The use of borrowed capital to increase position size. 10x leverage means
1% move = 10% PnL. Funding rate applies to the full position size, not
just margin.
### Liquidation
Forced closure of a leveraged position when losses exceed margin. Liquidation
price is calculated on **mark price**, not last price.
### Long
A position that profits when price goes up.
## M
### Mark Price
The “true” price used for PnL calculation and liquidation. Usually a
blend of spot and a moving average. Different from last price.
### Margin
The collateral required to open a leveraged position. Initial margin
(opens the position) and maintenance margin (keeps it open).
### Max Pain (liquidation)
The price level at which the most leveraged positions get liquidated.
Often where price “magnetically” moves toward expiry of large options.
## O
### Open Interest (OI)
The total number of outstanding contracts. High OI = high liquidity.
Low OI + high funding = potential squeeze setup.
### Order Book
A list of buy and sell orders at different prices. On-chain orderbooks
(Hyperliquid, dYdX) are fully transparent.
## P
### Perp (Perpetual Futures)
A futures contract with no expiry date. Uses funding rate to stay
anchored to spot.
### Premium Index
The gap between perpetual price and spot price, smoothed over time.
Component of funding rate calculation.
### Predicted Funding Rate
The estimated funding rate that will be paid at the next funding
timestamp. Updated continuously by exchanges.
## R
### Realized APR
The actual APR earned over a holding period, accounting for funding
rate changes. Lower than theoretical APR if funding normalizes.
## S
### Settlement
The transfer of funding payments. On CEXes: every 8h at fixed times.
On DEXes: every 1h (Hyperliquid, dYdX) or continuous (GMX borrowing).
### Short
A position that profits when price goes down.
### Spot Price
The current market price for immediate delivery. The “true” reference
price for funding rate calculation.
## T
### Taker Fee
The fee paid when you take liquidity from the order book (market order).
0.02-0.05% on most exchanges.
## V
### Vault
A smart contract that automatically executes a strategy. Some vaults
(e.g., Ethena, Aave) implement delta-neutral funding rate strategies.
### Volatility
The rate at which price changes. High volatility = larger price swings
= higher liquidation risk.
## W
### Wallet
A cryptocurrency wallet that holds your funds. For DEXes, you connect
your own wallet (self-custody). For CEXes, the exchange holds your
funds (custodial).
## Need More Definitions?
We’re constantly adding to this glossary. If there’s a term you want
defined, [contact us](/contact/).
**Related resources:**
– [Funding Rate Education](/learn/)
– [Funding Rate Screener](/funding-rate-screener/)
– [Top 10 Strategies](/top-funding-rate-arbitrage-strategies-2026/)