Introduction and Calculation of Contract Funding Fee Rules

Introduction and Calculation of Contract Funding Fee Rules

Introduction and Calculation of Contract Funding Fee Rules The main purpose of the funding rate is to narrow the price difference between the perpetual contract and the underlying asset.

The difference between a perpetual contract and a traditional futures contract is that it has no expiration date. Therefore, a trader can hold the position permanently unless he is liquidated. Therefore, the trading of perpetual contracts is very similar to the spot trading pair.

Therefore, cryptocurrency exchanges have created a mechanism to ensure that the price of perpetual contracts corresponds to the index. This is called the funding rate. The funding rate is calculated every minute, and the funding rate calculated at 08:00:00, 16:00:00 and 0:00:00 (HKT) will be taken and the funding fee will be collected at the time of the collection of the funding fee. 

 (The actual collection time will last for about 15 seconds. Please refer to the actual collection time.) Only when the position is held at that moment, the user needs to pay or receive the funding fee. If the position is closed before the fee is collected, no funding fee needs to be paid. (When the contract is closed in advance before settlement, no current funding fee needs to be paid.)

(1) Funding Fee Calculation Rules

Funding Fee = Position Value * Current Funding Rate. When the funding rate is positive, the long position pays the short position; when the funding rate is negative, the short position pays the long position.

Funding Rate = Clamp(MA(((Contract Bid Price + Contract Ask Price) / 2 - Spot Index Price) / Spot Index Price - Interest Rate), a, b) Note: The current interest rate is 0

To prevent the user's position from being affected by the calculated value of the funding rate due to extreme market conditions, the upper and lower limits (a, b) of the funding rate are stipulated. The specific parameters of a and b are as follows:

Currency Lower Limit Ratio of Funding Rate (a) Upper Limit Ratio of Funding Rate (b)

 BTC -0.375% 0.375%

ADA、AVAX、BCH、BSV、DOT、EOS、ETC、ETH、FIL、LINK、LTC、SOL、TRX、XRP -0.75% 0.75%

Other currencies -1.50% 1.50%

DOGE、SHIB -3% 3%

[The above data and indicator contents may be adjusted in real time according to the market situation, and the adjustment will not be notified separately.]

 (2) Funding Fee Collection and Distribution Rules

When the funding fee is collected, it will be directly deducted from the available margin of the user's contract group. When the available margin is insufficient, it will be deducted from the position margin. The amount of margin deducted is deducted in sequence according to the margin currency set by the user when opening the position. When it is lower than the maintenance margin after deduction, the system will execute the liquidation process of the position.

When the funding rate is distributed, the actual funding fee that can be obtained also depends on the total amount deducted from the counterparty's account by the system. The distribution sequence is also distributed to the contract group in sequence according to the margin currency set by the user when opening the position. 

(3) Funding Rate Adjustment

Under extreme market fluctuations, the platform reserves the right to adjust the upper and lower limits of the funding rate (the adjusted values are up to 1 for the upper limit and -1 for the lower limit respectively), as well as the right to adjust the interval of the perpetual contract funds (defaulted to be collected every 8 hours). Users can go to the real-time funding rate and the historical page of the funding rate to view the latest funding interval and the upper/lower limit of the funding rate. Please note that the funding fee (if any) will be deducted from the available balance in your contract wallet. If your contract wallet balance is insufficient, the funding fee (if any) will be deducted from your position margin, which may affect your forced liquidation price. Please manage your position accordingly to avoid any forced liquidation risk.