What Is Funding Fees?

Funding is a mechanism exchanges use to maintain a balance between the price of perpetual futures and the price of the underlying asset. When perp prices are trading below the underlying asset, buying needs to be incentivized. This is achieved by charging a funding fee to sellers, which is paid to the buyers. Simply put, funding fees are charged to one side of the trade and paid to the other side of the trade.

Funding is recalculated every funding period to keep balances in check.