What is Predicted vs Realized Funding?
Predicted vs realized funding is the distinction between the funding rate an exchange estimates for the upcoming settlement and the rate actually applied when that interval closes. The predicted figure updates continuously and is indicative; the realized figure is locked at settlement and determines the cash paid or received.
Predicted funding (also called estimated or projected funding) is the rate an exchange displays before a funding interval settles. It is recalculated continuously from the live premium of the perpetual mark price over the index price plus an interest component, so it drifts up and down as the market moves. Realized funding is the single rate that is frozen at the settlement timestamp and used to actually debit or credit open positions. Only the realized rate moves money.
The two differ because the predicted number is a moving forecast of an event that has not yet happened. On most venues predicted funding is a time-weighted or instantaneous average of the premium sampled across the interval, so a value quoted mid-interval can swing sharply before it locks. Some exchanges also apply a funding cap or a clamp to the premium, meaning an extreme predicted rate can be trimmed by the time it realizes. As a result, the rate a trader sees on the ticker minutes before settlement is not guaranteed to be the rate they pay.
For funding-rate arbitrage this gap is where theory meets reality. A screener that ranks opportunities on predicted APR can overstate carry: a position entered to capture a +0.05% predicted rate may realize at +0.02% if the premium mean-reverts before the timestamp, cutting the annualized return by more than half. Backtests and live PnL must therefore be reconciled against realized settlements, not predicted snapshots — the same principle behind reconstructing a leg from actual funding payments rather than an averaged feed.
Practically, arbitrageurs treat predicted funding as a directional signal for which side to hold and realized funding as the ledger. Entering right before settlement to grab one high predicted payment is fragile, because the realized rate can collapse; holding across many intervals lets the realized average converge toward the structural premium and makes carry more dependable. Always size expected return on realized history, then subtract entry/exit slippage and taker fees to see whether the spread actually survives.
Annualized funding from a per-interval rate
periods_per_year = (365 × 24 × 3600) ÷ interval_seconds funding_APR = rate_per_interval × periods_per_year realized_PnL = Σ (realized_rate_i × position_notional)
Use realized_rate for PnL; predicted_rate only estimates the next term. Example: 0.01% per 8h interval → 0.0001 × 1095 = 10.95% APR.
BTC: predicted overstates realized
- •Interval: 8h → 1095 periods/year
- •Mid-interval predicted rate: +0.05% → APR ≈ 0.0005 × 1095 = 54.75%
- •Premium mean-reverts before settlement; realized rate locks at +0.02%
- •Realized APR ≈ 0.0002 × 1095 = 21.9%
- •On $50,000 BTC notional: predicted implied $25/interval, realized paid $10/interval
- •Ranking the trade on predicted APR overstated carry by ~2.5×
Predicted vs realized funding
| Property | Predicted funding | Realized funding |
|---|---|---|
| When known | Before settlement, updates live | Fixed at settlement timestamp |
| Nature | Forecast / indicative | Actual amount charged |
| Moves money | No | Yes |
| Basis | Live premium sample | Locked interval average |
| Use in arb | Signal for which side to hold | Ledger for PnL and backtests |
FAQ
Why is predicted funding different from realized funding?
Predicted funding is a live forecast recalculated from the current mark-vs-index premium, so it drifts until the interval closes. Realized funding is the single value frozen at the settlement timestamp. Because the premium can mean-revert or hit a cap before settlement, the two rarely match exactly.
Which rate should I use to estimate arbitrage profit?
Use realized funding. Predicted funding tells you which side is likely to pay and is useful as a directional signal, but only realized settlements move money. Size expected carry on realized history, then subtract slippage and taker fees.
Can I profit by entering right before settlement to grab a high predicted rate?
It is fragile. A high predicted rate can collapse to a much lower realized rate if the premium mean-reverts before the timestamp, and entry/exit costs can erase a single payment. Holding across many intervals makes realized carry more dependable.
Do all exchanges compute predicted funding the same way?
No. Venues differ in sampling method (instantaneous vs time-weighted premium), interest components, funding caps, and interval length. This is why a screener must annualize each venue with its own interval and reconcile against realized settlements.
See predicted vs realized funding live across 36 exchanges.
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