Provisions on Funding Rates

USDT-margined perpetual contracts do not have expiration or delivery, so they need to use a "funding mechanism" to anchor the contract price to the spot price.

Funding fee = position value * current funding rate. When the funding rate is positive, longs pay shorts; when the funding rate is negative, shorts pay longs.

Funding is charged every 8 hours at 08:00, 16:00 and 24:00 (UTC) every day.

Users only need to pay or receive funding fees if they hold a position at that moment. If they close a position before the fee is charged, no funding fees are required.

In cross-margin mode: When funding is charged, it will be deducted directly from the user's realized profit and loss, up to a limit where the user's margin ratio equals the maintenance margin ratio + liquidation fee rate. No more will be charged.

In isolated position mode: when collecting funding fees, they will be deducted from the user's realized profit and loss first. If the realized profit and loss is insufficient, the excess will be deducted from the fixed margin of the user's open positions, up to a limit where the user's margin rate equals the maintenance margin rate + liquidation fee rate. No excess will be charged.

The actual funding fees that users can receive also depend on the total amount deducted by the system from the counterparty's account.

Funding Calculation

The funding fee that users will receive or pay is calculated as follows:

Funding fee = Net position * Contract value * Settlement price * Funding rate;

Among them, net position = number of long positions held (contracts) – number of short positions held (contracts).

When the funding rate is greater than 0, users with a net position greater than 0 need to pay funding fees, and users with a net position less than 0 will be charged funding fees;

When the funding rate is less than 0, users with a net position greater than 0 will be charged funding fees, and users with a net position less than 0 will need to pay funding fees.

Funding Rate Calculation

The funding rate is designed to ensure that the transaction price of the perpetual contract closely follows the underlying reference price. The funding rate for each period is calculated based on the data of the previous period. It is determined at the beginning of the current period and will not change during the period. It will be applied to the funding fee settlement at the end of the current period. The current period will also calculate the predicted funding rate for the next period every minute, and the predicted funding rate calculated for the last period will be used as the funding rate for the next period.

For example, the funding rate for the period from 8:00 to 16:00 is calculated based on the data from 00:00 to 8:00 in the previous period, which is determined at 8:00 and used for settlement at 16:00. At the same time, during the period from 8:00 to 16:00, a predicted funding rate is calculated every minute, which is the funding rate for the period from 16:00 to 00:00 the next day, and the last calculated predicted funding rate is used as the funding rate for the period from 16:00 to 00:00 the next day.