Assume time is 12 UTC and that the price of BTC is $37,000 (via bitcoin-dollar real-time index) and the Perpetual trades at $37,100 the whole time until 16 UTC. The average premium is computed as 0.27027% for the 4-hour period (100/37,000). This leads to a funding rate of 0.27027 / 8 = 0.03378% per hour.

Now assume that you are in a short position of 2 BTC. If you hold this position from 16 to 24 UTC, and the premium in 16-20 UTC period remains as 0.27027%, then you will earn interest of 199.99 USD for the eight-hour period [(2*0.0027027)*37000]

Assume time is 12 UTC and that price of BTC is $37,000 and the Perpetual trades at $37,500 until 16 UTC. The average premium is computed as 1.3514% for the 4-hour period. This leads to a funding rate of 1.3514 / 8 = 0.1689% per hour.

The maximum funding rate per hour in any given period is 0.1%. The minimum is -0.1%.

As a result, this 0.1689% hourly rate is floored to 0.1% per hour, so that the maximum 8-hour realisation will not exceed 0.80%.

Note that there is no "dampening" of rates done in this model: if a four-hour computed rate is near 0, then it will pay out non-0 value even if it is de minimis. 

Assume time is 12 UTC and that the index spot price of BTCUSD is $37,000, and the relative rate set for the four-hour period is 0.05% per hour.

Now assume the time is 14 UTC and the Perpetual trades at $38,000 and you enter a Short position of 4 BTC at this price.

You will immediately begin receiving funding at an absolute rate of 0.05%/$37,000 = 0.00000001354 USD per hour per unit.

In your available balance you will then see this rate applying in your unrealised PnL through continuous funding payout equal to:

• 0.00000001354 * 4 BTC = $74.15 per hour
• $1.24 per minute

This will pay out continuously until 16 UTC where the relative funding rate will change based on the market activity between 12-16 UTC.

Assume this new relative funding rate is now 0.03% and the real-time spot index is $37,900 for BTCUSD at 16 UTC.

In your 4 BTC short position at the end of the 2 hour period you will have $148.3 applied in your account log at 16 UTC.

From 16 UTC to 20 UTC a new absolute funding rate will begin applying of 0.03%/$37,900=$0.000000007916 per hour per unit.

Assume time is 14 UTC and you enter a position long 2 BTC on BTCUSD at 37,000. Assume that the funding rate for the four-hour period (12-16 UTC) is set as -0.04% per hour.

At 16 UTC, after you have held this position for two full hours, you will have earned 29.6 per hour [(0.0004*2 BTC)*37,000]. This is 29.6*2= $59.2, which credits continuously throughout the two hour period you hold it.

However, during this period, the price was at a premium and so the new four-hour rate set for 16 - 20 UTC is 0.04% per hour. After two hours of holding the position, you have paid $59.2 and you close at 18 UTC, two hours later.

Your funding for the four hour period you held the position is thus $59.2  for the last two hours of the first period then $-59.2 for the first two hours of the second period and your net flows are 0 for this.

Assume time is 14 UTC and you enter a position long 7 BTC on BTCUSD with spot index at $37,000. Assume that the funding rate for the four-hour period (12-16 UTC) is set as 0.033% per hour.

At 16 UTC, after you have held this position for two full hours, you will have paid 85.47 per hour [(7*0.00033)*37,000]. For two hours this costs 85.47*2=$170.94, which debits from your position continuously throughout the two hour period you hold it, in the form of Unrealised Profit/Loss (UPL).

Assume it's 12 UTC you are in a 5 BTC long position on BTCUSD with spot index at $37,000 and the rate in the funding period is -0.08%. This earns you funding of:

• 0.0008 * 5 = 0.004 BTC
• 0.004*37,000 = $148 per hour
• $2.4666667 per minute
• $0.04111111 per second
• $0.00004111111 per millisecond

This credits and debits every millisecond to every user with an open position. It credits first as "UPL" which is "unrealised" profit and loss, but you have the funds available right away to use in further positions or transfer into your Cash account.

The funding accumulates as UPL and is booked into your account log and realised when one of the following events occur:

1. You adjust your open position up or down by any amount
2. You hold until the end of the Funding Period, at which point it is booked (occurs every four hours

Assume it's 12 UTC you are in a 3 BTC long position on PF_BTCUSD with spot index at $37,000 and the rate in the funding period is -0.05%. Assume that you have set your profit currency as ETH and you hold this position until the end of the funding period at 16 UTC.

0.0005 * 3 = 0.0015 BTC 

0.0015*37,000 = $55.5 per hour ($222 for the whole period)

At the end of the period at 16 UTC, assume that the price of ETH is 2,500 (from the ether-dollar real-time index)

The conversion can be calculated using the following:

= Amount in USD to be converted / (Target currency index * (1 - 0.25%))

= 222 USD / (2,500 ETHUSD * .9975) 

= 0.089 ETH

An example of what this would look like in the account logs: