Funding rates in perpetual contracts help keep the market in balance. When the market is sitting at a premium, long positions pay short positions. For example, if $BTC is trading at a premium, longs pay 0.1% every 8 hours to shorts. This encourages shorts to open positions, bringing the market back to balance. Conversely, when the market is at a discount, shorts pay longs. This mechanism helps stabilize the market. Understanding funding rates is key to navigating perpetual contracts. $ETH and $BTC are popular perpetual contract markets. Trading perpetual contracts requires knowledge of these mechanics. #tradingterms #perpetualcontracts #cryptotrading