How Much Does Funding Cost Me on Polymarket Perps? (Forecaster Included)

A 0.42% premium on a 5x long position costs you about $252 on $500 margin over 24 hours — more than most people’s entire intended profit. That’s the number most Polymarket Perps traders never compute before opening a position: not the directional odds, but the funding bill. Here is the complete arithmetic, plus a free tool that does it for any market.

How much does funding cost on Polymarket Perps?

Funding cost = (premium × leverage) × hours held × margin. The premium is how far the perp price sits above (longs pay) or below (shorts pay) the underlying event probability. Polymarket samples the premium every 5 seconds, settles hourly, and caps the rate at 4% per hour. At 20x leverage, even a modest 0.01%/hour drag compounds to roughly 4.8% of your margin per day — which is why funding, not the directional call, kills most leveraged positions held through a weekend.

The three inputs you need

1. The premium. Perp mid minus underlying probability. You can read both from the order books — or let a tool compute it (below).
2. Your leverage. Funding applies to notional, so it scales linearly: 5x pays 5x the hourly rate against your margin.
3. Your holding period. The killer variable. Funding doesn’t care that your thesis needs “a few more days” — every hour bills at the current premium.

Worked examples

Example 1: 5x long on a Fed-decision market. Premium: +0.42% (perp trading above the implied probability — crowded long). Margin: $500.

• Hourly rate: 0.42% × 5 = 2.1% of margin
• 24h projection: 50.4% of margin ≈ $252
• You pay because you’re long into a positive premium.

Example 2: 20x long holding through an event weekend. Premium: +0.01% (small, but persistent). Margin: $1,000.

• Hourly drag: 0.01% × 20 = 0.2%
• 72h (Fri→Mon): 14.4% ≈ $144 — before any adverse price move.

Example 3: the flip side. Short the same crowded market at 5x and the funding flows to you: +$252 over the same 24h. Funding is a transfer from the crowded side to the thin side — which is why “paying to hold what everyone wants” is structurally expensive.

Free tool: funding-forecaster (CLI)

I maintain a small open-source forecaster that pulls the live perp book and underlying price, computes the premium, and projects the drag on your margin:

git clone https://github.com/polymarktexpert/funding-forecaster.git
cd funding-forecaster
python3 funding_forecaster.py \
  --market will-the-fed-cut-rates-in-december \
  --side long --leverage 5 --hours 24 --margin 500

Output (same math as above):

Market       : Will the Fed cut rates in December?
Premium est. : +0.420%  (perp vs underlying mid)
Funding rate : 0.420% per hour (cap 4%)
Side         : LONG @ 5x → you pay
Drag         : 2.10% of margin/hour
Projection   : 50.40% over 24h ≈ $252.00 on $500 margin

It’s read-only — no wallet, no API keys, no sign-in. Standard library only. MIT licensed. Run it before you open the position, not after.

What the forecaster can’t tell you

• Spikes past the cap. During news windows the premium can hit the 4% ceiling; the tool’s estimate is a snapshot, not a guarantee — see funding rate mechanics for how the cap interacts with settlement.
• Liquidation interaction. Funding drag reduces your margin buffer, which moves your effective liquidation price closer — compute that separately with the liquidation mechanics framework.
• Your exit timing. If your edge thesis resolves in 6 hours, a 24h projection overstates the bill; if it needs a week, it understates it.

FAQ

Q: How is funding calculated on Polymarket Perps? A: The premium (perp price minus underlying probability) is sampled every 5 seconds, accumulated, and settled hourly against leveraged positions — longs pay when the perp is above the underlying, shorts pay below, capped at 4% per hour.

Q: Why did my perps position lose money even though I was right? A: Funding. A correct directional call held at high leverage through a positive-premium weekend can pay more in funding than it earns on direction. Always project the drag before entry.

Q: Where can I check funding cost before opening a position? A: Use the free CLI forecaster at github.com/polymarktexpert/funding-forecaster — it computes premium-based drag for any market, side, leverage, and holding period in one command.

Q: Does funding apply to unleveraged positions? A: Yes, but the drag on a 1x position equals the raw hourly rate — usually small enough to ignore for short holds. Leverage is what makes funding a primary cost.

Q: Can funding be positive for me? A: Yes: if you’re on the thin side (short a positive-premium market, long a negative-premium one), funding flows to you hourly.

Educational content, not financial advice. Not affiliated with Polymarket. Last updated October 2026.