Ether Funding Rates Revert to Normal Days After Successful Merge

A popular trade drove up funding rates to lifetime highs for ether futures.

AccessTimeIconSep 21, 2022 at 7:23 a.m. UTC
Updated May 11, 2023 at 5:26 p.m. UTC

Funding rates on ether (ETH) futures have reverted to normal levels nearly a week following the Merge, during which a popular trade saw traders paying unusually high fees in order to remain in their positions.

Such trades led to unusually large liquidations on ether futures, with weekly trading volumes on spot ether surpassing those of spot bitcoin for the first time.

The rates are now at pre-Merge levels of 0.0045% on Binance and other crypto exchanges for short positions, or bets against price rises. Funding rates are periodic payments made by traders based on the difference between prices in the futures and spot markets.

As previously reported, funding rates for ether futures slid to around negative 0.3% in the first week of September – meaning traders paid 30 cents to exchanges every few hours on a $100 position, an amount that quickly added up when traders handling millions of dollars continue to hold their position over several weeks or days.

That represented a new all-time low for funding rates, breaking the previous low of -0.157% set during the March 2020 sell-off, analysts from research firm Delphi Digital pointed out in a Tuesday note.

“The crowded trade was to buy spot ETH and short ETH perps. Traders were buying spot ETH in order to receive the [Ethereum proof-of-work] airdrop,” Delphi analysts said, adding that this trade quickly unwinded after the Merge as traders reversed their positions by selling spot ether and unwinding their ether futures positions.

EthereumPOW refers to the version of the Ethereum blockchain that continues to run on a proof-of-work (PoW) consensus mechanism. The blockchain was established as a fork of the Ethereum network, which switched to a proof-of-stake (PoS) consensus mechanism last week in an event known as the Merge. The PoS network now continues as Ethereum.

As such, similar levels were last seen in June 2021 and followed by a massive short squeeze in July, but such market dynamics did not occur during September. A short squeeze refers to a sharp price increase that forces traders who had sold a borrowed asset in anticipation of repurchasing it at a lower price – a strategy known as shorting – to close out their positions, usually leading to a further increase in prices.

Ether trades just over $1,320 at writing time and is down 2.4% in the past 24 hours.


Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.

CoinDesk - Unknown

Shaurya is the Deputy Managing Editor for the Data & Tokens team, focusing on decentralized finance, markets, on-chain data, and governance across all major and minor blockchains.

Learn more about Consensus 2024, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to to register and buy your pass now.

Read more about