The funding rate is the recurring payment between the long and the short side of a perpetual contract, and on most venues it is the largest single cost of holding a position. When the rate is positive, longs pay shorts; when it is negative, the flow runs the other way. Settlement usually takes place every eight hours, and the calculation is simple: position size multiplied by the rate for that interval. Anyone using leverage pays this charge on the full notional value of the position, even though only a fraction of that sum is their own money.