#EUPrivacyCoinBan
Let's assume we are talking about a futures contract for a certain currency, and the spot market price is $100, while the futures contract price is $105.
Positive funding rate
- If the funding rate is 0.01% every 8 hours, it means that buyers will pay 0.01% of the contract value every 8 hours to the sellers.
- If the contract value is $1000, the funding rate will be $0.1 every 8 hours ($1000 * 0.01% = $0.1).
Negative funding rate
- If the funding rate is -0.01% every 8 hours, it means that sellers will pay 0.01% of the contract value every 8 hours to the buyers.
- If the contract value is $1000, the funding rate will be -$0.1 every 8 hours ($1000 * -0.01% = -$0.1).
Impact of funding rate on traders
- If you are a buyer in a futures contract, and you expect a price increase, the positive funding rate may not be favorable for you, as you will incur fees every 8 hours.
- If you are a seller in a futures contract, and you expect a price decrease, the negative funding rate may not be favorable for you, as you will incur fees every 8 hours.
