Funding flow: crypto funding rates in dollars per hour

A funding rate tells you what share of a position changes hands between longs and shorts. It doesn't tell you how much money that is. Funding flow does: multiply a perpetual's open interest by its funding rate, work it out for an hour, and you have the dollars longs pay shorts every hour at the current rates, or shorts pay longs when the rate is negative. The site shows it for every coin on the perpetuals index, and for every exchange on each coin's perpetuals page.

What is funding flow?

A perpetual future never expires, so funding keeps its price near the coin's spot price: a regular payment between the holders of long and short positions. When the rate is positive, longs pay shorts; when it's negative, shorts pay longs. The rate is a percentage of each position's value, so it reads the same for a $1,000 position as for a $1,000,000 one.

Funding flow applies that rate to everything held open. It's the running cost of every long on the market added up, or of every short when the rate turns negative: what the market as a whole pays to keep its positions open, in dollars an hour.

How is funding flow calculated?

One exchange's funding flow is its open interest, in dollars, times its funding rate for an hour:

Funding flow an hour = open interest × funding rate per hour

Exchanges publish rates for different periods, every hour, every few hours or continuously, so the site first turns each into a yearly rate (why, and how), then divides it by the 8,760 hours in a year. With example figures for three exchanges listing the same perpetual:

Example figures, not market data. On A, longs pay shorts about $5,708 an hour. On C the rate is negative, so its shorts pay its longs about $457 an hour.

Why a high funding rate can move less money

Look at A and B. B's rate is two and a half times A's, yet A's longs pay twice as much every hour, because five times as much is held open there. A high rate on a small market stands out in a table of rates and moves little money; a modest rate on the biggest market can be where most of the money changes hands. The rate says how expensive it is to hold a position. The flow says how much the market is actually paying.

That's worth remembering when you scan the perpetuals index. A coin with an eye-catching rate may have little held open behind it, and a coin with an ordinary rate and enormous open interest may carry the biggest bill of the day.

Adding funding flow up across exchanges

Across exchanges the flows are added, so opposite ones offset. In the example, C's shorts paying its longs takes $457 off the total, leaving $8,105 an hour net from longs to shorts. The net shows which side the market is paying on balance, and how fast.

It's a measure, not a transfer between exchanges. Funding is paid within each exchange, between its own longs and shorts, so nothing moves from A to C. And an exchange that settles every 8 hours pays 8 hours' worth at once; the flow spreads it over the hours, as the yearly rate spreads it over the year.

Where to read funding flow on the site

• The perpetuals index has a Funding flow/hr column: each coin's flow across the exchanges you have on. Hover a figure for each exchange's part, or sort by it to see where longs are paying the most right now.
• A coin's perpetuals page shows the flow across its exchanges under Open interest & funding, and each exchange's funding says who pays whom, and how much an hour.
• Under the perpetuals index, the card on funding as the running cost adds up every perpetual on the exchanges you have on: which side pays the other in all, and how much an hour.

Only the exchanges you have switched on are counted, so switching more on can change the total, and even its sign. An exchange whose feed doesn't carry its open interest can't be counted; the breakdown, on hover, says which.

What funding flow can tell you

• Where positioning is crowded. A large positive flow means longs are paying heavily to keep their positions open; a flow that turns negative means shorts have become the side that pays.
• What holding a position there costs. If you hold a long where longs pay, part of that flow is yours, hour after hour. Each exchange's funding rate says how big your part is.
• Where the rates differ. When one exchange's longs pay and another's are paid, the difference is what the funding spread trade collects.

What it leaves out

• It's the pace right now. Rates reset every hour or so and open interest moves with every trade, so the flow an hour from now can be very different.
• Open interest isn't counted the same way everywhere. Each exchange reports its own market, so treat the gaps between them as approximate.
• It follows the price. Open interest in dollars grows when the price rises, even if no one opens a position, so at the same rate the flow grows with the price too.
• It isn't a forecast. A crowded side can stay crowded for a long time.

Not financial advice. Rates and open interest move while you read them.