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What is Funding Rate
Funding rates are periodic payments made to either long or short traders, calculated based on the difference between the perpetual contract prices and spot prices. When the market is bullish, the funding rate is positive and tends to rise over time. In these situations, traders who are long on a perpetual contract will pay a funding fee to traders on the opposing side.
Why is Funding Rate important
Funding rate is primarily used to force convergence of prices between the perpetual contract and the underlying asset.
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