How to understand funding-rate yield

Income: Funding Rates seeks return from the periodic funding payment between perpetual longs and shorts.

The strategy holds a long spot position and a short perpetual position on the same underlying. Matching the notional sizes keeps net delta near zero, so price movement is intended to offset between the legs. When leveraged longs pay a positive funding rate to shorts, the short leg receives the payment.

Funding can become neutral or negative. Spot-perpetual spreads, leverage, liquidity, fees, slippage, margin requirements, and rebalancing affect the result. Delta neutrality reduces directional exposure; it does not guarantee positive returns or capital preservation.

Read What is delta neutral? and Income: Funding Rates risks.