What is the Funding Rate Mechanism?
The Funding Rate Mechanism plays a pivotal role in aligning the market prices of perpetual futures with those of the corresponding spot markets, primarily serving to narrow the price gap (price convergence) between the two.
To ensure the futures prices are in line with the index prices, cryptocurrency trading platforms introduce a mechanism known as the funding rate.
Definition of Funding Rate
The funding rate is a periodic fee paid by long or short traders based on the price difference between the perpetual futures market and the spot price. When the market exhibits a bullish trend, and the funding rate is positive, long traders of perpetual futures pay the funding fee to short traders. Conversely, in a bearish market with a negative funding rate, short traders pay the funding fee to long traders.
Payment of Funding Fees
Funding fees are transferred from the long side to the short side, with the platform itself not collecting any funding fees. The actual funding fee you receive depends on the total amount deducted from the counterparty's account.
Calculation and Collection Time of Funding Rate
On the KCEX futures trading platform, the funding rate is calculated every 8 hours, at 00:00, 08:00, and 16:00 UTC+8. Traders holding a position in any direction at the time of funding fee collection will be charged or credited the corresponding funding fee. If a trader holds no position at the collection time, no funding fee will be charged or credited.
Important Notes
Please note: The actual fee collection time may have a 15-second deviation. For example, if you open a position at 08:00:05 UTC+8, you will still be subject to the corresponding funding fee, even with a slight delay.
Other Essential Information
*The funding rate is calculated every minute, and at the funding fee collection times (08:00/16:00/24:00 UTC+8), the funding rate calculated at 07:59, 15:59, and 23:59 will be used for the fee collection.
How Funding Fees Are Calculated
Funding Fee = Position Quantity * Mark Price * Funding Rate
Note
The data and indicators mentioned above may be adjusted in real-time based on market conditions, without prior notice.
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