TL;DR
A funding rate is a periodic payment exchanged between long and short traders in perpetual futures, used to keep the perp's price anchored to the underlying spot price.
Perpetual futures have no expiry, so there's no settlement to force the perp price back to spot. The funding rate solves this: at regular intervals one side pays the other. When the perp trades above spot (more longs), longs pay shorts; when it trades below (more shorts), shorts pay longs — incentivizing traders to push the perp back toward spot.
Funding is an ongoing cost or income while you hold a position. If you're long during positive funding you pay a fee each interval; if you're short, you earn it. Over time funding can be significant — a small hourly rate compounds heavily over days or weeks — so it's a real factor in any held perp trade, not just the price move.
Solana perp DEXs like Drift and Jupiter Perps use funding (or an equivalent borrow/utilization fee) to keep prices aligned with spot. Some delta-neutral strategies are built specifically to collect funding by being short a perp while holding the underlying spot. Always check the current funding rate before opening a leveraged position.