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The Funding Rate Game

Who pays for the imbalance

longs → shorts
avg0.030%/8hAPR32.5%end skew65%
0Day 1 · rate 0.045%/8h · basis 0.72% · 71% long · arb activeDay 1 · rate 0.042%/8h · basis 0.65% · 70% long · arb activeDay 1 · rate 0.040%/8h · basis 0.58% · 69% long · arb activeDay 2 · rate 0.037%/8h · basis 0.52% · 68% long · arb activeDay 2 · rate 0.035%/8h · basis 0.47% · 67% long · arb activeDay 2 · rate 0.033%/8h · basis 0.43% · 67% long · arb activeDay 3 · rate 0.031%/8h · basis 0.38% · 66% long · arb activeDay 3 · rate 0.029%/8h · basis 0.34% · 65% long · arb activeDay 3 · rate 0.027%/8h · basis 0.33% · 65% longDay 4 · rate 0.027%/8h · basis 0.32% · 65% longDay 4 · rate 0.027%/8h · basis 0.31% · 65% longDay 4 · rate 0.026%/8h · basis 0.30% · 65% longDay 5 · rate 0.026%/8h · basis 0.30% · 65% longDay 5 · rate 0.026%/8h · basis 0.29% · 65% longDay 5 · rate 0.026%/8h · basis 0.28% · 65% longDay 6 · rate 0.025%/8h · basis 0.27% · 65% longDay 6 · rate 0.025%/8h · basis 0.26% · 65% longDay 6 · rate 0.025%/8h · basis 0.25% · 65% longDay 7 · rate 0.025%/8h · basis 0.25% · 65% longDay 7 · rate 0.024%/8h · basis 0.24% · 65% longDay 7 · rate 0.024%/8h · basis 0.23% · 65% longyour cumulative funding (solid)long share (dotted, 50–90%)8h periods → (darker bars = arb active)

Over 7 days you pay $62.39 on $10,000 notional

Avg 0.030%/8h ≈ 32.5% annualized; funding is a transfer, not a fee.

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Want the why? The mechanism, in full: