# Funding Rate

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**Publisher:** Decentralized Finance Publication

## Definition

A periodic payment between long and short positions in a perpetual swap contract that keeps the perp price aligned with the underlying spot price. When longs outnumber shorts, longs pay shorts (positive funding). When shorts dominate, shorts pay longs (negative funding).

## Related reading

- [What Are Perps?](https://decentralized-finance.io/learn/what-are-perpetual-swaps-perps-defi/)

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Canonical: https://decentralized-finance.io/glossary/funding-rate/