What is funding?

A perpetual contract is structured to closely track the spot price, and this alignment is achieved through a mechanism known as funding. Funding involves a continuous exchange of payments between long position holders and short position holders in the perpetual contract. When a perpetual contract is trading at a premium compared to the spot price, funding becomes positive, resulting in longs paying shorts. This dynamic exerts downward pressure on the contract's price. Conversely, when a perpetual contract is trading at a discount relative to the spot price, funding turns negative, with shorts paying longs. In this scenario, there is upward pressure on the contract's price. It's important to emphasize that funding payments occur directly between users and are not subject to any fees imposed by Delta Exchange. You can see complete details about funding here.