Periodic payment between long and short holders in a perpetual-futures contract — the yield source for delta-neutral stablecoins.
The funding rate is a periodic payment between the long and short sides of a perpetual futures contract, set by the exchange to keep the perp's price close to the underlying spot price. When perps trade above spot, longs pay shorts; when they trade below, shorts pay longs. Delta-neutral stablecoins like USDe capture this yield by holding spot crypto and shorting the corresponding perp. The rate reverses when market sentiment flips, which is why delta-neutral yields fluctuate.