Question 1

What is funding rate arbitrage?

Accepted Answer

Funding rate arbitrage involves opening hedged positions between spot and perpetual futures to earn the funding rate. When the rate is positive, shorting the futures contract earns the rate.

Question 2

What are the risks of funding rate arbitrage?

Accepted Answer

Key risks include exchange risk, liquidation risk (insufficient margin during extreme moves), and rate reversal risk. Use low leverage and monitor rate changes.

Question 3

How often are funding rates settled?

Accepted Answer

Most exchanges (like Binance) settle perpetual futures funding rates every 8 hours — at UTC 00:00, 08:00, and 16:00. Some contracts may have different settlement intervals.

Question 4

What kind of annualized returns can funding rate arbitrage achieve?

Accepted Answer

It varies with market conditions. During bull markets when funding rates are generally positive, annualized returns may reach 15-30%. In quiet markets, returns may be only 5-10%, and rate reversals can cause losses.

Question 5

How does NowToCrypto help monitor funding rates?

Accepted Answer

NowToCrypto's funding rate page aggregates real-time and historical funding rates across all trading pairs, helping you quickly identify coins with abnormally high rates and evaluate arbitrage opportunities.

Arbitrage Analysis