Ever wondered how perpetual futures stay aligned with spot prices without an expiry date? Thats where the funding rate comes in. Since perps never settle like traditional futures, exchanges use a periodic funding rate to encourage balance between longs and shorts. When the perp trades above spot, longs pay shorts and when it drops below, shorts pay longs. Think of it as a built-in equilibrium mechanism that keeps derivatives tethered to real market prices. Understanding funding rates can help you gauge market sentiment and avoid surprise costs on your positions.