# Funding Rates ## What are Funding Rates? Funding rates are a mechanism used in perpetual futures markets to help the price of the futures contract stay close to the underlying asset's spot price. Perpetual futures contracts, unlike traditional futures, do not have an expiration date, so these funding rates serve as a way to balance the market. When the funding rate is positive, the perp trades at a higher price than its underlying asset. Conversely, a negative funding rate indicates the perp trading lower than its underlying asset. Funding payments are determined by the funding rate. Longs pay shorts when the funding rate is positive, and shorts pay longs when the funding rate is negative. The result is a rubber-band effect that enforces a degree of parity between the price of a perp and spot price. ## How does Zeta calculate and pay out funding? Check out the [Perpertual Funding System](/zeta-protocol/exchange-architecture/perpetual-funding-system.md) section of our docs for a more comprehensive explanation and examples. ### Ready to get started? [Start trading now!](https://dex.zeta.markets?utm_source=gitbook\&utm_campaign=guide_funding\&utm_term=cta) --- # Agent Instructions: Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter: ``` GET https://docs.zeta.markets/zeta-protocol/learn-how-to-trade-on-zeta/funding-rates.md?ask= ``` The question should be specific, self-contained, and written in natural language. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.