A periodic payment made between traders in perpetual futures contracts to ensure the contract price stays close to the underlying asset's spot price.
The funding rate is a mechanism used in perpetual futures markets to incentivize traders to keep the futures price aligned with the spot price of the underlying asset. If the futures price trades above the spot price, long position holders pay short position holders; if the futures price trades below the spot price, short position holders pay long position holders. This payment occurs at regular intervals.