> ## Documentation Index
> Fetch the complete documentation index at: https://docs.dyxy.io/llms.txt
> Use this file to discover all available pages before exploring further.

# Funding

> How funding payments keep the perp price close to the spot price.

Perpetual futures never expire, so they need another way to stay close to the real price of the asset. That mechanism is **funding**: a regular payment exchanged directly between long and short traders.

## How funding works

* When the perp price trades **above** the spot price, the funding rate is **positive**. Longs pay shorts. This makes holding longs more expensive and pulls the perp price down.
* When the perp price trades **below** the spot price, the funding rate is **negative**. Shorts pay longs.

Funding is paid between traders. DYXY does not receive any part of it.

## How much you pay or receive

**Funding payment = position size × funding rate**

**Example.** You hold a $10,000 long on ETH. The funding rate is +0.01%. At the funding time, you pay $1 to shorts. If you held a short of the same size, you would receive \$1.

You only pay or receive funding if you hold the position at the moment funding is settled. Opening and closing between two funding times means no funding at all.

## Where to see funding

The market bar shows the **current funding rate** and a **countdown to the next payment**. Funding is settled at regular intervals that depend on the market, and the interval is shown next to the rate. Your past payments are listed under **Funding history** in V2.

## Funding and your strategy

| Situation | Effect |
| - | - |
| Long while funding is strongly positive | You pay funding at every interval, which slowly eats into profit |
| Short while funding is strongly positive | You collect funding on top of any price gain |
| Holding for weeks | Funding can add up to more than your trading fees |
| Opening and closing within an hour | Funding is usually negligible |

> [!TIP]
>
> An extremely high positive or negative funding rate shows that one side of the market is crowded. It is worth knowing before you join that side.


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