Funding Rate
Overview
The funding rate is a mechanism used in perpetual contracts to keep their prices aligned with the spot market. Unlike traditional futures contracts, which converge to the spot price at expiration, perpetual contracts have no expiration or delivery. Instead, they use the funding rate to maintain price anchoring.
Funding Fee Settlement Rules
Funding is settled every 8 hours:
00:00 GMT+8
08:00 GMT+8
16:00 GMT+8
Only traders holding a position at the time of settlement are subject to funding fees.
Funding direction:
If the funding rate F > 0: Longs pay funding fees, and Shorts receive
If the funding rate F < 0: Shorts pay funding fees, Longs receive
The platform does not charge any funding fees. All fees are peer-to-peer.
Funding Fee Calculation
Funding Rate Components
1. Composite Rate
For a contract pair (e.g., BTC/USDT):
Underlying asset: BTC
Quote asset: USDT
Where:
rq: Quote currency interest rate
ru: Underlying currency interest rate
N: Number of funding settlements per day
Example:
2. Funding Rate Basis Rate
This reflects the decay of the funding impact over the settlement cycle:
Where:
F: Funding rate of the current period
t: Time remaining until next settlement (in minutes)
T: Total duration of the funding cycle (480 minutes)
Example:
3. Reasonable Price
Example:
Depth-Weighted Prices
Let:
Pb: Depth-weighted bid price (buy orders)
Pa: Depth-weighted ask price (sell orders)
Pr: Reasonable price
Premium Index Calculation
Cases:
If Pa ≥ Pr ≥ Pb, then:
Premium Index=Basis Rate\text{Premium Index} = \text{Basis Rate}Premium Index=Basis Rate
If Pb > Pr, then:
If Pr > Pa, then:
Average Premium Index
The average premium index at time ttt is the arithmetic mean of all premium index values from t - 60 minutes to t.
Final Funding Rate Formula
The final funding rate is constrained within predefined bounds:
Where:
F: Final funding rate
C: Composite rate
Dmax, Dmin: Premium deviation bounds
Fmax, Fmin: Funding rate bounds
Clamp Function:
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