Funding Arbitrage FAQ

Funding (the Funding Rate) is a periodic payment used in perpetual futures contracts to keep their price closely aligned with the spot price of the underlying asset. Since perpetual futures, unlike traditional ones, have no expiration date, the funding rate helps balance the difference between spot and futures prices.

Perpetual futures are derivative contracts that, unlike ordinary futures, have no expiration date, so a position can be held indefinitely. Their price is kept near spot precisely thanks to funding. Perpetual futures let you use leverage and open positions both long (on a rise) and short (on a fall).

When the funding rate is positive, traders holding LONG positions pay traders holding SHORT positions.

When the funding rate is negative, traders holding SHORT positions pay traders holding LONG positions.

The exchange only routes the payment between the parties — it does not keep the funding for itself.

In crypto futures trading "LONG" and "SHORT" represent two position types:

1. LONG position: the trader expects the price to rise and buys the contract to sell it later at a higher price.
2. SHORT position: the trader expects the price to fall and sells the contract to buy it back later cheaper.

Both approaches let traders profit from price swings — whether the market rises or falls.

Funding arbitrage is a strategy for earning on the funding rate without betting on market direction. The trader opens a market-neutral (delta-neutral) position: holds the asset on one market and an equal opposite position on another. Profit or loss from price movement cancels out, while the net income comes from the funding received.

The classic scheme for positive funding looks like this:

1. Buy the asset on spot for the desired amount.
2. Simultaneously open a shortposition of the same size on the asset's perpetual futures.
3. Any price movement is offset: a spot rise cancels the growing loss on the short and vice versa.
4. At settlement times you receive funding from the longs, which is your profit.

For negative funding the scheme is mirrored: short on spot (or selling the asset you hold) and a long futures position.

Yes. Besides the "spot + futures" combo there is cross-exchange funding arbitrage: for the same asset you open a long on the exchange with a low (or negative) funding rate and a short on the exchange with a high positive rate. The position stays delta-neutral, and income comes from the rate difference. The P2P.Army funding scanner shows exactly these spreads between venues.

The most common intervals on crypto futures:

• Every 8 hours — the most popular.
• Every 4 hours
• Every 2 hours
• Every 1 hour

Funding is settled strictly at the designated time. To receive it, you only need to hold the position open at the settlement moment — you can enter even 1 minute before.

The P2P.Army scanner lets you subscribe to signals: you get a reminder with a list of spreads, for example 15–30 minutes before settlement, so you have time to prepare positions and not miss the funding time.

The payment is calculated simply: position size × funding rate at the settlement moment. For example, with a 10,000 USDT position and a 0.05% rate per interval the payment is 5 USDT. Over a day with an 8-hour interval settlement happens 3 times. Note that the rate is not fixed and may change by the next interval.

• Long-term entry — the position is held to collect funding over a long time. Sometimes a positive spread persists for days, weeks or even months. The trader usually sets an alert for when the spread closes and exits the position as soon as it disappears, then looks for new ones.
• Short entry — the position is opened only to capture a single funding payment a few minutes before settlement. Such trades last around 5–15 minutes: open a neutral position, receive funding, close.

The Funding section on P2P.Army aggregates funding rates and spreads across many exchanges and instruments in real time. There is a table with filters, rate-history charts and Telegram alerts before settlement so you can prepare positions in time and find the best bundles.

• Liquidation of the futures leg — with high leverage a sharp price move can liquidate the short/long before spot offsets the loss. Keep a margin buffer.
• Rate changes — funding may drop or flip sign by the next interval, and the bundle stops being profitable.
• Price divergence (basis) — spot and futures do not always move perfectly in sync, causing a temporary unrealized loss.
• Fees and slippage — entering and exiting two legs costs fees that can exceed the funding received.
• Exchange failures and delays — trading halts or API delays make it hard to open/close both legs simultaneously.

Leverage on the futures leg lets you commit less capital and raises the return on the margin used. But the higher the leverage, the closer the liquidation price and the smaller the move needed to force-close the futures leg — even with the offsetting spot leg. That is why delta-neutral strategies usually use moderate leverage and keep a margin buffer to survive volatility until the next settlement.