Plain-English definition
Funding is the fee that keeps a perpetual contract near the spot price. When longs are crowded, they usually pay shorts; when shorts are crowded, they pay longs.
A high funding rate is not a buy or sell signal. It is a crowding read, best paired with open interest, liquidations, and spot depth.
Why it matters
Funding Rate matters because crypto markets can look precise while still being shallow, crowded, or poorly sourced. A useful read is not just the number. It is the number, the size behind it, the context around it, and the part it cannot explain.
Simple example
A simple Funding Rate example is a reader comparing two venues with the same headline price but different depth. The deeper venue can absorb more capital before the trade, peg, or yield reading starts to move against the user.
How Bathymark uses this term
Bathymark uses Funding Rate to translate open market data into live liquidity readings. When the term touches a live page, the reading links back to the relevant chain, protocol, stablecoin, DEX, perps, or Signal so the source remains checkable.
Common mistake
The common mistake is treating Funding Rate as a complete signal by itself. Bathymark treats it as one instrument: useful when read beside liquidity, source, size, and what the number cannot prove.