What is funding fee?
Coin margined perpetual contracts have no expiry settlement date. To balance market rationality and maintain market liquidity, funding fees are used to ensure that the current market price can always anchor the global spot price.
In perpetual contract trading:
- The buyer and seller of the contract will pay or collect funding fee every 8 hours;
- Time stamp of fund fee: 0:00 (GMT+8), 8:00 (GMT+8) and 16:00 (GMT+8);
- If the funding rate is positive, long positions will pay funding fees to short positions.Otherwise, if the funding rate is negative, short positions will pay funding fees to long positions;
- Traders only need to pay or collect funding feees for holding positions at these timestamps;
- If the trader closes the position before the specified funding timestamp, there is no need to pay/acquire any funding fees.
Funding fee is the core operating mechanism of perpetual contracts.
The calculating formula of the funding fees you pay or collect is as below:
- funding_fee = funding_rate * position_value
- funding_rate = Clamp（prime_index + clamp(interest - prime_index, buffer, -buffer)，max_funding_rate，-max_funding_rate）
- Interest = (quote_coin_interest_index - base_coin_intrest_index) / funding_interval
- prime_index =MA (max(0, depth_weighted_bid_price - indexed_fair_price) - max(0, indexed_fair_price - depth_weighted_ask_price)) / indexed_price ,60min)
- max_funding_rate = 0.75%