đ¨đ¨Funding Ratesâ
The funding rate is the cost of holding an open position in a perpetual swap contract (perp). It is usually calculated by the difference between the [price of the perpetual swap contract] and [price of a spot-based index].
If funding is positive, the perp price is trading at a premium (above) the index price. Open long positions pay funding, open short positions receive funding. If funding is negative, the perp price is trading at a discount (below) the index price. Open short positions pay funding, open long positions receive funding.
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