What Are Stock Perpetuals? How Funding Rates Work and How to Calculate Them
How stock perpetuals differ from stock tokens, leverage and liquidation risk, what funding rates mean, how often they settle and how to calculate them, and what to watch when the US market is closed.
Search for Apple or Tesla on an exchange and, alongside stock tokens, you will see stock perpetuals such as AAPLUSDT and TSLAUSDT. The names are similar but they work very differently. This guide explains what stock perpetuals are, how they differ from stock tokens, how to read the mark price, index price and funding rate on a trading page, and how to calculate what a position costs to hold.
What is a stock perpetual?
A stock perpetual is a derivative contract with no expiry date whose price follows a stock. You buy (go long) or sell (go short) the contract and gain or lose on price moves, but you hold neither the stock nor a stock token.
- Leverage: a small margin controls a larger position. Our stock pages list each venue's maximum leverage; on some venues popular US stock contracts go up to 100x.
- Shorting: you can trade a falling price.
- Liquidation: if the price moves against you and margin runs short, the position is closed by force. The higher the leverage, the smaller the move you can absorb.
- Funding: a mechanism unique to perpetuals, explained below.
If you only want long-term exposure to a stock without leverage or shorting, a stock token is usually simpler; see what tokenized stocks are.
Stock perpetuals versus stock tokens
| Question | Stock token | Stock perpetual |
|---|---|---|
| What you hold | A token backed by shares held by the issuer | A contract with the venue, with no shares behind it |
| Leverage | Usually none | Yes, from a few times up to 100x or so |
| Shorting | Not directly | Yes |
| Holding cost | Trading fees and the premium | Trading fees plus periodic funding |
| Dividends | Usually reinvested into the token | None |
| Withdraw to a wallet | Some can be | No |
| Worst case | An extreme scenario in which the token loses its value | Losing the whole margin, which can happen quickly on liquidation |
Reading the prices on a trading page
A stock perpetual's trading page usually shows several prices side by side at the top. Binance's TSLAUSDT is a typical example:
- Last price: the most recent trade, the reference for a market order.
- Index price: the venue's reference value built from share prices and other sources, standing for "what the stock is worth now". While the market is closed it usually stays near the last close or follows the venue's published off-hours rules.
- Mark price: used for unrealized profit and loss and liquidation. It is normally smoothed around the index so that one unusual trade cannot trigger a wave of liquidations.
- Funding rate and countdown: the expected rate for the current period and the time to the next settlement. Only positions open at the settlement moment pay or receive it.
What is the funding rate?
Perpetuals never expire, so to keep the contract price close to the index, exchanges use a funding rate: longs and shorts pay each other at regular intervals.
- Positive funding: the contract usually trades above the index, and longs pay shorts.
- Negative funding: the contract usually trades below the index, and shorts pay longs.
Funding moves between the two sides; the exchange does not keep it. The rate typically has two parts, a premium component reflecting the gap between contract and index and an interest component set by the venue, with the exact formula and caps in each venue's contract rules. The more crowded the long side and the further the contract trades above the index, the higher the rate and the more expensive long positions become.
How funding is calculated
At each settlement, the amount you pay or receive = position value × funding rate.
Example: you hold a $1,000 AAPL perpetual long and this period's funding rate is +0.01%. At settlement you pay $1,000 × 0.01% = $0.10. If funding is settled every 8 hours and stays the same, that is $0.30 a day and about $109.50 a year, or 10.95% of the position value. Position value means the notional size of the contract: if you open a $1,000 position with $100 of margin at 10x, funding is charged on $1,000, which is 109.5% of your margin over a year.
Our funding calculator takes the position value, the rate per settlement, the settlement interval, the number of days and the direction, and returns the total and an annualized figure. The default example below is a $10,000 long at 0.005% every 8 hours for 7 days: 21 settlements, about $10.50 in total and about 5.48% a year.
How often funding is settled
Settlement intervals vary by venue. On the exchanges we track, most stock perpetuals settle every 8 hours, while Hyperliquid settles hourly. To make rates comparable, we convert Hyperliquid's hourly rate to an 8-hour equivalent. Some venues temporarily shorten the interval during volatile markets; check each venue's contract specification for actual times and intervals.
Leverage and liquidation: the risk to calculate first
Leverage magnifies losses as well as gains. With a 10x long, a fall of about 10% wipes out the margin, and because of maintenance margin requirements you are liquidated before the price gets that far; at 20x, a fall of about 5% can be enough. Daily moves of 5% are not unusual for US stocks and are larger around earnings and major news, so holding high leverage overnight or over a weekend is risky.
The remedies are simple: use lower leverage, keep extra margin, set stops, and avoid holding high leverage around earnings or long holidays.
What to watch while US markets are closed
Stock perpetuals usually trade around the clock, but US shares have live prices only during market hours. While the market is closed (overnight, at weekends and on holidays), venues calculate the index differently, the contract can move well away from the last close and then snap back at the open, creating gaps. High-leverage positions are especially vulnerable then. See trading stock tokens at weekends for more.
Comparing stock perpetuals here
- In a stock page's venue table, open "More metrics" for each venue's open interest, funding rate and maximum leverage.
- Use the rankings to find the highest and lowest funding rates; very high funding means a crowded long side and an expensive long position.
- Use the venue comparison for account requirements and regional availability.
Frequently asked questions
Do I pay funding if I am not holding at settlement?
No. Funding is exchanged only on positions open at the settlement moment; close before then and that period does not apply.
If funding is negative, is a long position a sure profit?
No. Negative funding means longs receive payments, but price moves usually dwarf funding, and the rate can turn positive at any time.
Are stock perpetuals the same as stock futures?
No. Futures have fixed expiries and clear through an exchange clearing house. Perpetuals never expire, use funding to stay near the index, and are matched and cleared by the venue that offers them.
Stock perpetuals are high-risk leveraged products and you can lose your entire margin. This guide explains concepts and is not investment advice.