The vocabulary, defined.
Plain-English definitions of the terms used across NDA-Trade — funding rates, spreads, delta-neutral positions and the metrics that describe them.
- Funding rate
- A periodic payment between long and short holders of a perpetual futures contract, designed to keep the perp price tied to the underlying index. Positive funding means longs pay shorts; negative means shorts pay longs.
- Funding interval
- How often funding is settled. Many centralized exchanges settle every 8 hours; many perpetual DEXs settle hourly. The interval changes how a per-period rate converts to an annualized figure.
- Perpetual futures (perp)
- A futures contract with no expiry date. Instead of converging to spot at expiry, its price is anchored to the index by the funding mechanism.
- Delta-neutral
- A position whose value does not change with the price of the underlying asset, typically built from offsetting long and short legs of equal size.
- Long leg / short leg
- The two sides of a delta-neutral pair trade: the long leg is opened on the venue with the lowest (or most negative) funding, the short leg on the venue with the highest.
- Net funding spread
- The short-leg funding rate minus the long-leg funding rate — what the combined position collects per settlement interval before costs.
- Annualized yield (APR)
- A per-interval rate scaled to a year: rate × settlements per year × 100. Used to compare opportunities across venues with different funding intervals.
- Stability score
- NDA-Trade's measure of how consistently a funding spread has held its sign and size over recent history. Higher is more dependable.
- Mark price
- The exchange's fair-value price for a contract, usually derived from an index of spot markets. Used for margining and liquidations, and in the funding formula.
- Index price
- A volume-weighted composite of spot prices from several exchanges, serving as the reference the perp is anchored to.
- Basis
- The difference between a derivative's price and its underlying index or spot price. Persistent positive basis usually coincides with positive funding.
- Entry spread
- The instantaneous price difference between the two venues when opening both legs of a position, expressed as a percentage. A favorable entry spread means the books pay you to open.
- Exit spread
- The equivalent price difference when closing both legs. Entry plus exit make up the round trip.
- Round-trip spread
- Total execution cost of the full position cycle: entry spread plus exit spread, excluding fees.
- Maker / taker
- Maker orders rest in the order book and usually pay lower (sometimes negative) fees; taker orders execute immediately against resting liquidity and pay more. Spread measurements differ per execution style.
- Percentile (p10 / p90)
- Statistics of a spread's distribution over a time window. The p90 entry spread is the level beaten only 10% of the time — a realistic 'good entry' target for patient orders.
- Liquidation
- Forced closure of a leveraged position when its margin falls below the exchange's maintenance requirement. In delta-neutral trades each leg can be liquidated independently.
- Margin
- Collateral posted to hold a leveraged position. Cross margin shares collateral across positions; isolated margin dedicates it per position.
- Open interest
- The total size of outstanding contracts in a market. Higher open interest generally means deeper liquidity for entering and exiting.
- CEX / perp DEX
- Centralized exchanges (Binance, Bybit, OKX) custody funds and match orders off-chain; perpetual DEXs (Hyperliquid, Lighter, Extended) settle on-chain or on their own rollups. Funding dynamics and risks differ between the two.
Want the concepts in context? Start with What is funding rate arbitrage? or watch them live on the funding rates page.