The primary mechanism to tether Perpetual contract price to spot price is Funding. Funding occurs every 8 hours at 04:00, 12:00, and 20:00 (SGP Time). You will only pay or receive funding if you hold a position at one of these times. If you close your position prior to the funding exchange, then you will not pay or receive funding.
1. Funding Rate Calculation
Funding = position value * funding rate
When the funding rate is positive, longs pay short. Vice versa if it is negative.
Est. Funding Rate = Clamp (MA (((Best Bid + Best Offer) / 2 - Spot Index Price) / Spot Index Price-Interest), a, b)
*Interest Rate currently = 0
*For Perpetual Contracts: a and b are the boundary values (currently it is +/- 0.003). MA is short for Moving Average.
The funding rate is updated every minute. The Est. Funding Rate at 4:00, 12:00 and 20:00 (SGP Time, UTC+8) will be used for funding exchange.
2. Actual Funding Fee
When the funding occurs, we prioritize the fee to be charged from the position margin. If the position margin is insufficient (funding fee will continue to be charged until the user’s maintenance margin rate is equal to the minimum), the remaining amount will be deducted from the user’s available balance.
The platform does not charge any fees on funding; it is exchanged directly between traders.
Suppose a trader opened 10000 contracts long at 8:11 AM (Singapore time) at $10000.
- At 10:20, the trader closes the position, then he/she will not be charged for funding fees.
- At 12:00, the trader still holds a position. Suppose the BTC price at that time is $10024 and the Funding Rate is 0.025%. Therefore, the trader will need to pay position value * funding rate = (10000/10024)*0.025% = 0.00025 BTC as funding fee to the opposite side as funding fee (if the funding rate is negative, the short side will pay the long side).