The higher the funding rate, the better the yield

Crypto Funding Rates: Explained in Plain English

Crypto funding is a recurring payment between traders on perpetual futures markets. It helps keep the futures price aligned with the spot price of the underlying asset. In simple terms: if the futures price is higher than spot, long traders pay shorts. If it’s lower, shorts pay longs.

Funding rates are typically applied to perpetual contracts — those with no expiration date. They’re calculated at regular intervals (usually every 8 hours) and expressed as a percentage. This mechanism keeps the market balanced and prevents wild price gaps between spot and derivatives.

How to Earn from Crypto Funding: Strategies & Examples

Funding rate farming has become a legit side hustle in the crypto world. One basic strategy: go against the crowd. If most traders are long and the funding rate is positive, open a short and collect payouts every 8 hours.

But it’s not just about opening a position. You need to evaluate:

• Funding rate level (higher = better yield)
• Asset volatility
• Trading volume

Advanced strategies include:

• Spot-futures hedging: Buy the asset on spot, short it on futures, earn funding
• Automation via bots: Use APIs and scanners to auto-open positions when funding spikes

Pro tip: Monitor funding rate changes throughout the day — peaks offer juicy payouts.

️ How to Avoid Losses While Farming Funding

• Respect liquidation risks — don’t ignore margin calls
• Use stop-losses to protect your capital
• Don’t go full degen with high leverage unless you know what you’re doing

Funding Arbitrage: How It Works & Is It Worth It?

Funding arbitrage means exploiting differences in funding rates across exchanges or contracts. For example, if Binance offers +0.05% and Bybit offers +0.01%, you can open opposing positions and profit from the spread.

Types of arbitrage:

• Cross-exchange: Between platforms like Binance and Bybit
• Cross-contract: Between different futures contracts of the same asset
• Funding vs premium: Use funding to offset expected price moves

Heads up: Fees, slippage, and execution speed all impact your final profit. Precision matters.

Funding Rate Scanner: Where to Find & How to Use

Funding scanners help you track current rates across exchanges and spot high-yield opportunities fast.

Top tools:

• Coinglass (formerly Bybt)
• Laevitas, Binance Funding Rate, Bybit Funding History
• Telegram bots & TradingView dashboards

Key metrics to watch:

• Funding rate %
• Trading volume
• Open interest (OI)

Scanners help you spot overheated markets and crowd bias — perfect for contrarian strategies.

Example

If the scanner shows BTC funding at +0.15%, it means most traders are long. You could consider a short position to collect funding payouts.

Funding on Bybit: Platform Highlights

Bybit is a go-to platform for futures trading. It offers a transparent funding system and solid tools for strategy building.

Key features:

• Funding calculated every 8 hours
• Live funding rate charts
• Supports arbitrage and hedging strategies

Bybit allows up to 100x leverage — but don’t use it just for funding farming. Combine it with market analysis and news flow.

Hack: Use Bybit’s demo account to test your funding strategy risk-free. For secure payments, consider using a Trust Wallet.

Step-by-Step Guide: How to Earn from Funding

1. Learn the basics — understand how funding works and why it exists
2. Pick a platform — Binance, Bybit, OKX are solid choices
3. Connect a funding scanner — find the best entry points
4. Open a position — e.g., short when funding is high and positive
5. Manage risk — control leverage and set limits
6. Take profits — funding pays every 8 hours, no need to hold forever

Over time, you’ll refine your strategy and grow your capital. If you accept crypto donations or investments, use MetaMask for secure transactions.

FAQ: Crypto Funding Rates

What is a crypto funding rate?

It’s a fee paid between long and short traders on perpetual futures to keep prices aligned with spot.

How often is funding paid?

Usually every 8 hours, but it varies by exchange.

Can I earn passive income from funding?

Yes — if you position correctly and manage risk, funding can be a steady yield source.

Is funding arbitrage safe?

It can be — but you need to account for fees, slippage, and execution speed.

What’s the best tool to track funding rates?

Coinglass is a top choice. Also check Laevitas, Binance, and Bybit dashboards.

✅ Final Thoughts

Crypto funding rates are more than just background noise — they’re a legit way to earn yield, hedge positions, and build smart strategies. Whether you’re a beginner or a seasoned trader, understanding funding mechanics gives you an edge in the perpetual futures game.

From scanners to arbitrage, bots to hedging — the tools are there. The key is discipline, timing, and knowing when to zig while the crowd zags. Stay sharp, stay curious, and let the funding flow work for you.

Disclaimer / No Liability