BTSE implemented the Funding Fee mechanism to facilitate market fairness and keep the perpetual futures market price close to the average market price (index price).
When there is a difference between BTSE's perpetual futures market price and the index price, the system will charge funding fees from those who gained profit due to the market price deviation at every 1-hour settlement, then credit the funding fees to those who lost profit due to the market price deviation.
When the latest market price is much lower than the index price (which will obviously benefit to the Shorts), traders in Short will be charged for the funding fees, and those in Long will receive the funding fees. On the contrary, if the market price is much higher than the index price, Longs will be charged, and Shorts will receive.
Funding fees are settled every hour. In addition, the minimum funding rate is +/- 0.1 bps (0.001%).
Funding fees will only be charged / paid when both of the following conditions are met:
- Funding rate is not equal to 0% (if funding rate = 0, no funding fees will be charged / paid)
- The status of your position must be Open during the system’s funding fees settlement (if the position is closed prior to the funding fees settlement, no funding fees will be charged / paid)
Funding Fee = Notional Value x Funding Rate
- Funding Rates will be updated every minute. When settling the fee, the system will use every minutes' average results in the past 1 hour to calculate the fee.
- Minimum funding rate for long positions: 0.001%
- Minimum funding rate for short positions: -0.001%
- Notional Value = Mark Price x Position Size x Contract Multiplier
- Funding Rate = [Max (0, Impact Bid-Perp Index) - Max (0, Perp Index-Impact Ask)] / Perp Index / 24
- When the funding rate is positive, Longs pay Shorts; when the funding rate is negative, Shorts pay Longs
- Impact Bid Price: The average buy price of the first 10,000 highest bid orders in the Order Book
- Impact Ask Price: The average sell price of the first 10,000 lowest ask orders in the Order Book
- Index Price: 1230 USD
- Mark Price: 1250 USD
- Impact Bid: 1299 USD
- Impact Ask: 1300 USD
- Position Size: 1000 contracts
- Contract Multiplier: 0.001
Notional Value = 1250 x 1000 x 0.001 = 1250
Funding Rate = [Max (0 , 1299-1230) - Max (0, 1230-1300)] / 1230 / 24 = (69-0) / 1230 / 24 = 0.002337
Funding Fee = 1250 * 0.002337 = 2.92125 USD (Long pays to Short)