Funding rate, mark price and index price

The index price is a reference price of the underlying asset, calculated from spot prices on several exchanges. It represents "the market price" outside the futures contract.

The mark price is the price used to calculate unrealised profit and loss and liquidations. It is based on the index price and adjusted to smooth out short spikes. Using the mark price instead of the last trade price protects traders from being liquidated by a single unusual trade.

Because perpetuals never expire, something must stop their price from drifting away from the spot market. This is the funding rate:

• When the contract trades above the index, the rate is usually positive: longs pay shorts.
• When it trades below, the rate is usually negative: shorts pay longs.

Funding is exchanged between traders at fixed intervals (on many exchanges, every 8 hours). The exchange does not keep it. The payment equals the position value multiplied by the rate.

• A high positive funding rate shows strong demand for long positions.
• A negative rate shows more demand for short positions.
• The countdown on the screen shows the time until the next funding payment.

These numbers describe the current state of the market. They are not forecasts.