What is the funding rate?

The funding rate is a mechanism used in the perpetual contract market to adjust the price difference between contract prices and spot prices. This is why you sometimes see the contract price differing from the spot price; the funding rate is designed to bring the futures price closer to the spot price. Since perpetual contracts have no delivery date, the funding rate is settled every eight hours.

Funding rate is positive: contract price is higher than spot, longs pay shorts, indicating that there are more long positions than short positions.

Funding rate is negative: contract price is lower than spot, shorts pay longs, indicating that there are more short positions than long positions.

📊 Relationship between funding rate and market behavior

Normal logic:

1. Rate increase (positive rate) → Market bullish sentiment high → Contract price higher than spot

2. Rate decrease (negative rate) → Market bearish sentiment strong → Contract price lower than spot

How is the funding rate calculated?

Funding rate = interest rate + premium index

The interest rate is the cost of borrowing coins from the platform. If you use USDT to go long on BTC, it is equivalent to BTC being borrowed from the platform, so interest is charged.

Premium index = (contract price - spot price) ÷ spot price

Frequently Asked Questions:

1⃣️ If I opened the contract for only half a day, less than eight hours, how is the funding rate calculated?

Answer: It doesn't count. You don't have to pay; the funding rate is calculated based on the settlement time. If you sell before the settlement point, then you don't have to pay. However, if you open a position one minute before the settlement point, sorry, you'll have to pay first. But you might also receive money.

2⃣️ Not all coin contracts settle every eight hours. For example, the newly listed SAHARA settles every hour because it has larger fluctuations, and there is a concern that everyone might get liquidated within eight hours, making it hard to collect the funding rate. So, it is changed to settle every hour.

3⃣️ Then why did I make money on the contract but ended up losing when closing it?

Answer: Because you didn't earn enough; the profit is not sufficient to cover the funding rate and transaction fees.#资金费率 #币安Alpha上新