Most funding-rate dashboards advertise a number like "+38% APR" on a given pair. That's the annualized rate at this exact moment, before any execution cost. The realized number — what actually lands in your wallet over a 30-day hold — is meaningfully lower. Here's the conversion.
Step 1: From Hourly Rate to APR
A funding rate is quoted per settlement interval. To annualize, multiply by the number of intervals per year:
- 1h settlement (Hyperliquid, Lighter, Pacifica, dYdX): rate × 8760
- 4h settlement (Variational, edgeX): rate × 2190
- 8h settlement (Binance, Bybit, OKX, most CEX): rate × 1095
Example: Binance BTC perp shows funding of +0.0042% next period. Annualized: 0.0042% × 1095 = 4.6% APR. That's the headline.
Step 2: Subtract Round-Trip Fees
You pay entry and exit fees on both legs. Most CEX perps charge 1.8–5.5 bps taker. DEX legs range from 0 (Lighter, Orderly) to 4.5 (Hyperliquid). A typical pair: 5 bps Binance taker + 4.5 bps Hyperliquid taker = 9.5 bps each side × 2 sides = 19 bps total.
Amortize that over your hold period. On a 30-day hold: 19 bps / 30 days = 0.63 bps/day = 2.3% annualized in cost drag. If your headline gap is 4.6%, you keep 4.6% − 2.3% = 2.3% net. If it's 35%, you keep 32.7% net.
Step 3: Add Slippage
Slippage depends on size and book depth. For $10K position on liquid BTC/ETH pairs, slippage is typically 0.5–2 bps per leg. For $100K on the same pairs, 3–8 bps. For thin altcoins, slippage can exceed 100 bps and kill the trade outright.
Step 4: Account for Rate Reversion
This is the subtle one. A 100% APR snapshot is almost certainly a spike that will revert. The realized return over a 7-day or 30-day hold is much closer to the median rate over the period, not the peak.
Our screener exposes a "stability score" (coefficient of variation of the rate over the past 24h). Green dot = consistent rate; red dot = volatile/spike. For backtest math, use the 30-day median rate, not today's snapshot.
Putting It Together
A realistic worked example for a "good" trade:
- Headline APR (today's snapshot): 38%
- 30-day median APR: 22% (rate reverted)
- Round-trip fees (5+4.5 bps × 2 legs, 30-day amortized): −1.8% APR
- Slippage on $10K (1 bps × 2 entries + 1 bps × 2 exits): −0.5% APR
- Realized net APR: 22% − 1.8% − 0.5% = 19.7%
That's still an excellent return. The point isn't that arbitrage doesn't work — it's that the headline number is roughly 2× what you actually keep on a typical hold. Plan capital around the 19.7%, not the 38%.