Funding Rate Arbitrage Calculator
What the delta-neutral carry pays once fees, margin and the basis are counted.
How it works
Funding arbitrage is the delta-neutral carry: buy the asset on spot, short the same notional of its perpetual. The two price exposures cancel, so the position stops caring about direction and keeps only the funding stream, which the short collects whenever the rate is positive. It is the cash-and-carry trade with a perpetual standing in for the dated future.
What decides it is rarely the rate. Fees are charged four times — in and out of both legs — so a short hold has to clear a high bar; the spot leg must be paid for in full while the short only posts margin, so the matched size is always smaller than the capital committed; and the basis is live PnL on the short, which is why delta-neutral is not the same as risk-free.
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How the Funding Rate Arbitrage Calculator works
Funding rate arbitrage is the delta-neutral carry on a perpetual: buy the asset on spot, short the same notional of its perpetual future, and collect the funding the longs pay the shorts. The two price exposures cancel, so the position stops caring which way the market goes and keeps only the rate.
That is the idea. This calculator prices the version that survives contact with an exchange — where fees are charged four times, where the spot leg has to be paid for in full while the short only posts margin, and where the basis between the two legs is live PnL rather than a rounding error. Enter the rate you can actually see and the fees you actually pay; the figure that decides the trade is the break-even funding rate it returns.
Why the position is neutral and what that does not mean
One unit long on spot and one unit short on the perpetual means every dollar the asset gains on one leg it loses on the other. Direction stops mattering. What remains is the funding payment, charged on notional every interval — eight hours on most venues — and paid by longs to shorts whenever the perpetual trades above spot, which is most of the time in a rising market.
Neutral is not the same as risk-free, and the distinction is where the trade actually goes wrong. The funding rate can turn negative, at which point you are paying to hold the structure. The basis can widen after you enter, which is an immediate loss on the short. And the short leg is a leveraged position that can be liquidated by an upward move even though your spot leg is gaining exactly as much — unless the two sit in the same margin account, being right about the trade and wrong about where the collateral lives is enough to close it for you.
Capital does not equal position size
The spot leg must be bought outright. The short leg only needs margin. So capital splits as C = N + N ÷ L, and the matched notional is N = C × L ÷ (L + 1) — always less than the capital committed, however much leverage is used. At 1× the capital divides evenly and half of it is working; at 3× three quarters is; no leverage ever makes the spot leg free.
Sizing both legs at the full capital is the standard way this trade is over-leveraged by accident: it silently doubles the position, halves the distance to liquidation on the short and turns a conservative carry into a directional bet on the basis. The calculator derives the notional from the capital rather than asking for it, so the two cannot drift apart.
The break-even funding rate
Four fills stand between you and the carry: in and out of the spot leg, in and out of the perpetual. At 0.1% spot and 0.05% perpetual that is 0.3% of notional, which at the baseline 0.01% per 8 hours takes thirty payments — ten days — to earn back before a single cent is profit.
This is what the break-even rate expresses: the funding per interval at which the trade exactly returns the capital over the period you entered. Below the line the carry is not paying for its own execution. It falls as the holding period lengthens, because the same fees are spread over more payments, which is why funding arbitrage rewards patience and punishes churn — and why maker fills, or a venue with no spot fee, change the arithmetic far more than a slightly better rate does.
Cash and carry, and the basis trade
The same structure with a dated future instead of a perpetual is the classic cash-and-carry, and the arithmetic here covers it: enter the premium the future trades at as the entry basis and zero as the exit basis, since a dated contract converges to spot at expiry. The return is then the basis captured rather than funding collected, which is why the trade is also called a basis trade.
The perpetual version has no expiry to force convergence, so nothing guarantees the premium narrows — funding is the mechanism that pulls it in, and it works by paying you rather than by settling. That is the real difference between the two: the dated contract gives you a known payoff on a known date, the perpetual gives you an income stream and no deadline. Enter both a non-zero entry and exit basis to see how much of a supposed carry is really a directional view on the spread.
What the calculator will not tell you
It will not tell you where the rate is right now. There is no live feed here and no cross-venue screener — that is a different product, and one whose numbers are wrong the moment they are cached. Read the current rate off the exchange and type it in.
It also assumes the rate holds for the period you enter, which no funding rate does. Rates move with positioning and can flip within a day. Treat a long holding period as a scenario rather than a forecast, and re-check the break-even against the rate you can see rather than against the rate you hope persists.
FAQ
Is funding rate arbitrage actually risk-free?
No. Price risk is hedged, but three exposures remain: funding can turn negative and start costing you, the basis can widen against the short after you enter, and the short leg can be liquidated by an upward move if its margin is not shared with the spot leg. Add exchange and custody risk on top — the two legs usually sit in different places.
How much can funding arbitrage make?
Whatever the rate pays minus what execution costs, which is why the break-even figure matters more than any headline. A sustained 0.01% per 8 hours is roughly 11% a year on notional before fees; elevated rates of 0.1% annualise past 100% but rarely persist for long. Anyone quoting a fixed annual return for this trade is quoting a rate that has already changed.
What leverage should the short leg use?
Enough to size the position sensibly, not enough to be closed by noise. Leverage here buys capital efficiency rather than profit — the funding is earned on notional either way — while each step up moves liquidation closer. The calculator shows the upward move that closes the short; if that number is smaller than a move the asset makes in a normal week, the leverage is wrong.
What is the difference between funding arbitrage and a basis trade?
The instrument on the short side. A basis trade shorts a dated future and is paid by convergence at expiry — a known payoff on a known date. Funding arbitrage shorts a perpetual, which never expires and pays through the funding mechanism instead. Both are cash-and-carry: long the asset, short the derivative, collect the carry.
Does this show live funding rates across exchanges?
No. It computes from the rate you enter and does not fetch or publish live rates — a screener is a different tool, and a cached table of rates would be stale before it was read. The funding calculator takes the same approach for a single position.
Do the two legs have to be on the same exchange?
No, and spreading them can improve the rate you capture. But separate venues mean separate margin: a move against the short cannot be covered by the gain on the spot leg without an actual transfer, which is exactly when transfers are slowest. Same-venue execution with shared margin is the safer default even when the rate is slightly worse.