On September 29th, 2022 at 12:00 UTC, the timescale of the funding rate for all perpetual contracts changed from a 4 hour window for calculation and settlement to a 1 hour window for calculation and settlement. The maximum permissible rate also increased, from 0.1% to 0.25%.
The following support articles have been updated with the details of the new funding rate methodology:
This page exists to document the prior method for funding rate calculation and examples, which can be found below.
Pre-September 2022 Funding Rate Methodology
|Auto-Roll Period||Every 4-Hours on 12 UTC, 16 UTC, 20 UTC, 24 UTC, 4 UTC, 8 UTC|
|Rate-setting Calculation Window||Rate for next period is calculated over current 4-hour period (e.g., rate for 12-16 UTC period is calculated in window between 8-12 UTC)|
Between start and end of Rate-setting Period the Funding Rate is computed as the time-weighted average premium, and standardised to a per-hour basis.
Permissible range per 1 hours: [-0.1%, +0.1%] (i.e., 80 basis point magnitude for 8-hour realisation period)
Continuously based on Funding Rate set at the end of the prior Funding Period.
Positions will immediately and continuously receive or send funding while open in the perpetual contracts.
The funding accumulates as UPL and settles every four hours at end of Funding Period, or when user changes net open position (whichever occurs first).
|Funding Rate Multiplier||
n = 8
This is the coefficient used in the calculation of the funding rate.
A value of 1/n means that, ceteris paribus, it will take n hours to realise the Average Premium.
Example: if the Average Premium is 0.32% for the 4-hour period, then Funding Rate is equal to 0.04%, meaning that over the course of 8 hours, this 0.32% total will be realised.
|Funding Rate Calculation||
In a given 4-hour Funding Period, Premium values calculated from minutely perpetual contract prices (240 observations) using an Impact Mid are recorded versus the Real Time Platform Ticker.
The Impact Mid is the median of the average entry price market-selling x value of contracts and market-buying x value of contracts. See table above for contract-specific values.
The Average Premium is calculated as the average of the mid 120 values recorded from the above 240 observations.
Finally, this value is weighted by the Funding Rate Multiplier.
If Average Premium is greater than 0 for the 4 hour period, those in Long positions will continuously pay out to Short positions, which pushes the price closer to Index.
If Average Premium is less than 0 for the 4 hour period, those in Short positions will continuously pay out to Long positions, which pushes the price closer to Index.
In order to get a complete understanding of the funding rate dynamics of the Perpetual Contract, we present examples to demonstrate the key features.
Click the titles to expand: