A perpetual future is a contract that tracks a coin's price but never expires. Without an expiry to pull it back to spot, it needs another way of staying close, and that's funding.
How funding works
Periodically, commonly every eight hours, the longs and shorts pay each other. When the contract trades above spot, longs pay shorts, which encourages selling the perpetual and buying spot. When it's below, shorts pay longs.
Putting a number on it
To compare funding with any other yield, annualise it. 0.01% every eight hours is 0.03% a day, or about 11% a year. That's the base rate on many venues in a quiet market.
What it tells you
Persistently high positive funding means longs are crowded and paying up to stay in. It doesn't by itself mean a top, but it does tell you which side has more to lose if the market turns. Negative funding during a fall shows shorts paying to press their position, which is what a short squeeze feeds on.
Basis and carry
The gap between a future and spot is the basis. Traders earn funding or basis by being long spot and short the future, the "cash and carry" trade. When the carry is high, that trade soaks up the leverage demand and flattens the premium over time.