A margin interest rate is the cost of borrowing funds (like USDT) or assets (like BTC, ETH) on an exchange to engage in margin trading. Margin trading allows you to open larger positions than your own capital would permit by using leverage. The interest rate is the fee you pay to the lender (either the exchange or other users) for this borrowed capital. These rates are dynamic and fluctuate based on the supply and demand for that specific asset on the exchange.

Margin interest rates are paid by borrowers to lenders. Here's who these participants are:

• Borrowers (Traders): Traders who want to use leverage pay the interest rate. They might borrow stablecoins (like USDT) to open a leveraged long position, or borrow a crypto asset (like BTC) to open a short position on the spot market.
• Lenders (Investors): Users who hold assets on an exchange can choose to lend them out to borrowers to earn a passive income from the interest payments. Exchanges facilitate this peer-to-peer lending process.

This tool shows the borrowing rate, which is the cost for traders.

This data is valuable for several strategies:

• Cost Management: Before opening a margin position, you can compare exchanges to find the lowest borrowing cost, which directly impacts your profitability.
• Funding Arbitrage: This data is a key component of the 'Long Futures, Short Spot' arbitrage strategy. To profit, the negative funding rate you receive must be greater than the borrow rate you pay for shorting the spot asset.
• Lending Opportunities: By seeing which assets have high borrowing rates, you can identify opportunities to lend your holdings and earn a higher yield.
• Market Sentiment: A very high borrow rate for an asset like BTC can indicate strong demand for shorting, suggesting bearish sentiment in the spot market.

Each exchange operates as its own separate lending market. The interest rate for an asset is determined by the specific supply (how many users are willing to lend it) and demand (how many traders want to borrow it) on that particular platform. Factors like the number of users, available margin limits, and market-making activities can cause significant differences in rates between exchanges like Binance, Bybit, and OKX.

The rates displayed in the table are the current hourly interest rates, shown as a percentage. Exchanges typically calculate and charge interest on an hourly basis. To estimate the daily cost, you can multiply the hourly rate by 24. To estimate the annual cost (Annual Percentage Rate or APR), you would multiply the daily rate by 365.