What is the Funding Rate?

The funding rate is a periodic exchange of funding fees between long and short traders based on the spread between the market price of a perpetual contract and the spot price. When the market trend is bullish, the funding rate is positive and the long trader of a perpetual contract will pay the funding fee to the short trader. On the contrary, when the market is bearish, the funding rate is negative, and it is the short perpetual trader who pays the funding fee to the long trader. The platform does not charge any user funding fees, which are collected from position holder to position holder.

All perpetual contracts are settled every 8 hours at 04:00 UTC+8, 12:00 UTC+8 and 20:00 UTC+8 respectively. Traders are only required to pay or receive a funding fee if they hold a position at the funding fee settlement time point. If you close a position before the Funding Fee Settlement Time Point, you will not pay or receive any funding fees.

When a funding fee is charged, it will be deducted from the user's cash balance first, and if the cash balance is insufficient, the excess will be deducted from the fixed margin of the user's position, up to the point where the user's margin rate equals the maintenance margin rate, and the excess will not be charged again.

Why is the Funding Rate Mechanism needed?

The main purpose of the Funding Rate is to enable the market to regulate itself through the regular exchange of funding fees between long and short positions, so that the market price of perpetual contracts can be anchored to the spot price. The perpetual contract has no expiration date, as long as it is not forced to close the trader can hold the position permanently. So the trading of perpetual contracts and spot trading is very similar, but in order to perpetual contracts market price does not deviate, so need a mechanism to ensure that the price of perpetual contracts anchored to the spot price, so there is a funding rate mechanism.

How is the Funding Fee calculated?

Funding Fee = Position Value * Funding Rate.

Currency-based contracts:

Position Value = Number of Positions Held * Contract Face Value / Marked Price.

For example: Trader A has a long position in 100 BTC USD contracts, 1 contract of BTC USD cUSD, the fair price is 10,000 USDT, and the current funding rate is 0.01%. The value of the position = 100*100/10,000 = 1 BTC and the funding fee = 1 BTC x 0.01% = 0.0001 BTC.

Since the funding fee is positive, the long position holder must pay this fee to the short position holder. Therefore Trader A must pay a funding fee of 0.0001 BTC, while a short position holder holding the same number of contracts will receive a funding fee of 0.0001 BTC.

U-native Contracts:

Position Value = Number of Positions Held * Marked Price.

Example: Trader A has a long position of 10 BTC in a BTC USDT contract with a fair price of 10,000 USDT and a current funding fee of 0.01%. The value of the position = 10 x 10,000 = 100,000 USDT and the funding fee = 100,000 x 0.01% = 10 USDT.

Since the Funding Fee is positive, the long position holder must pay this fee to the short position holder. So Trader A has to pay 10 USDT for the Funding Fee, while the short position holder with the same number of contracts will get 10 USDT for the Funding Fee.

View Funding Fee

In the core information data above the K-plot, you can see the current funding rate and the remaining time until settlement.

By clicking on the contract information on the right side, you can see all the historical funding fees that have been settled in the past.