Crypto funding rates explained: why 10.95 % a year shows up everywhere

Open the funding table of almost any crypto exchange and one number keeps coming back: 0.01 % per 8 hours, which is 10.95 % a year. It is not a market price. It is built into the formula. This guide explains what a funding rate is, who pays whom, where the 10.95 % comes from, and what more than 6,800 funding payments on Binance since 2020 actually looked like for Bitcoin, Ethereum and Solana.

Why perpetual futures need a funding rate

A normal futures contract has an end date. On that day it is settled at the price of the underlying asset, so the two prices must meet. A perpetual futures contract ("perp") has no end date. Nothing forces its price back to the price of the coin in the spot market, where coins are bought and sold for cash.

The funding rate does that job. If the perp trades above the spot price, the rate turns positive and holding a long position costs money, while holding a short position earns money. That makes buying the perp less attractive and selling it more attractive, until the gap closes. If the perp trades below spot, it works the other way round.

Perpetual futures are the largest crypto market by far. In our own recording of Binance trades, more than four fifths of the hourly net buying and selling in Bitcoin, Ethereum and Solana came from perpetual futures, not from the spot market (see our guide to cumulative volume delta).

Who pays whom, and how much

• The traders pay each other. The exchange passes the payment from one side to the other and does not keep it.
• It is paid on the size of the position, not on the money put up as margin.
• It is paid at fixed times. On Binance, Bybit and OKX the usual rhythm is every 8 hours; some contracts and some exchanges settle every 4 hours or every hour.
• Only the position at that moment counts. Whoever holds a position at the funding time pays or receives; whoever closed a minute earlier does not.

An example: a long position of $10,000 at a funding rate of 0.01 % pays $1 at each funding time. That is $3 a day and about $1,095 a year, as long as the rate stays the same.

With leverage, the same payment weighs more. If that $10,000 position is held with $1,000 of margin (10 times leverage), $1,095 a year is about 110 % of the margin. Funding is one reason why leveraged long positions are expensive to hold for long.

Where the 10.95 % comes from

Exchanges publish their funding formula. On Binance, Bybit and OKX it has two parts:

• An interest part, fixed at 0.01 % per 8 hours for most contracts.
• A premium part, which measures how far the perp trades above or below the spot price.

The formula has a buffer: as long as the perp trades within about 0.05 % of the spot price, the result is exactly the interest part. Three payments a day for 365 days gives 0.01 % × 3 × 365 = 10.95 % a year.

So 10.95 % is the resting rate of the system, the number that appears when nothing special is happening. Exchanges that pay every hour use a smaller hourly number that adds up to the same 10.95 % a year. In our Binance record, 43 % of all Bitcoin funding payments since August 2020 were exactly this base rate.

The practical consequence: a funding rate of 10.95 % a year carries no information. The information is in the distance from it. Above it, buyers are paying extra to hold leveraged long positions. Below it, and especially below zero, the demand for long positions is weak or the demand for short positions is strong.

What six years of funding payments show

We collected every funding payment of the Binance coin-margined perpetual contracts for Bitcoin and Ethereum since August 2020 and for Solana since September 2021, to 13 November 2026. All rates are shown per year (the rate per 8 hours × 3 × 365).

Binance, to 13 Nov 2026	Bitcoin	Ethereum	Solana
Payments counted	6,857	6,834	5,769
Average funding rate, per year	9.5 %	9.3 %	−2.1 %
Middle value (median), per year	10.95 %	10.95 %	9.3 %
Payments exactly at the base rate	43 %	41 %	40 %
Payments with a negative rate	18 %	21 %	29 %
Longest stretch of negative funding	8 days	16 days	18 days

The average hides how uneven the years were:

Average funding, per year	Bitcoin	Ethereum	Solana
2020 (from August)	16.1%	18.2%	–
2021	22.3%	24.0%	18.5%
2022	1.8%	−1.0%	−36.3%
2023	7.5%	7.4%	3.6%
2024	12.2%	13.1%	15.1%
2025	5.1%	4.7%	1.0%
2026 (to 13 November)	4.5%	3.2%	1.9%

Source: InvestWealth Crypto Flows, own collection of Binance funding payments (coin-margined perpetuals). Solana 2021 from September. Other contracts and exchanges differ in detail.

Three things stand out.

Funding is high in manias and low afterwards. In 2021, longs paid more than 20 % a year on average to hold Bitcoin and Ethereum positions. In 2022, after prices had fallen, the average was close to zero. 2024 was a second, smaller peak.

Since 2025 the average has been below the base rate. In 2025 and 2026 the yearly averages were between 1 % and 5 %, less than half of the 10.95 % resting rate. Negative payments pulled the average down.

Negative funding is normal, and it can be extreme. About one Bitcoin payment in five was negative. For Solana it was more than one in four, and in November 2022, when the exchange FTX collapsed, Solana funding on Binance fell as low as −2.5 % per 8 hours. That single month is why the Solana average for all years is negative.

What a negative funding rate means

When funding is negative, shorts pay longs. The perp is trading below the spot price, because more traders want to be short through futures than long. That happens in sharp sell-offs, when traders hedge coins they hold, and when a coin is hard to borrow, so that futures are the only easy way to bet against it.

A negative rate is a description of positioning. It says that the short side is crowded and is paying for it. It does not say that the price must rise.

How to read funding rates sensibly

• Compare with the base rate, not with zero. On an 8-hour contract, 0.01 % is neutral.
• Convert to the same unit. An hourly rate and an 8-hour rate cannot be compared directly. Per year is the simplest common unit.
• Look at more than one exchange. Each exchange has its own formula, caps and rhythm, and the rates differ at any moment. A volume-weighted average across exchanges is steadier than any single one.
• Look at the history, not one payment. A single high payment means little. Weeks of high funding mean that leveraged buyers have paid a lot to stay in.
• Do not read it as a forecast. Funding was high for most of 2021 while prices kept rising, and high again before they fell.

Can you earn the funding rate?

In principle, yes: hold the coin and sell the same amount as a perpetual future. Price moves cancel out, and what is left is the funding. This is called the basis trade or cash-and-carry trade.

We tested it on the same Binance data. Holding $100,000 of Bitcoin against a $100,000 short position from August 2020 to November 2026 collected about $59,000 after fees, with a worst dip of about 3 %. Most of it came in 2021 and 2024. The same trade on Solana lost money: in November 2022 the short side had to pay, and the position lost more than a third of its value within a month.

*Hypothetical backtest on Binance coin-margined perpetuals, including fees; past results say nothing certain about the future.* The trade also carries risks that a backtest does not show, above all the risk of the exchange itself.

See it live

Crypto Flows is the order-flow desk in our Research Terminal. It shows the funding rate of Bitcoin, Ethereum and Solana on six exchanges side by side, each against the 10.95 % line, with the volume-weighted average, the 30-day history, the time of the next payment and the basis trade backtest by year.

See Crypto Flows →

*Recorded market data. Educational research, not investment advice.*

Frequently asked questions

Hamann, H. (2026). Crypto funding rates explained: why 10.95 % a year shows up everywhere. InvestWealth.com. https://www.investwealth.com/learn/guides/crypto-funding-rates

<a href="https://www.investwealth.com/learn/guides/crypto-funding-rates">Crypto funding rates explained: why 10.95 % a year shows up everywhere</a> (InvestWealth.com)