Funding Fees are periodic payments exchanged between the buyer and seller every 8 hours.
- If the average perpetual contracts price is higher than the spot price, Longs will pay the Shorts, and vice versa if the average perpetual contracts price is lower than the spot price.
- You will only pay/receive Funding Fees if you hold a position at the moment of Funding Timestamp (8:00 UTC / 16:00 UTC / 24:00 UTC)
- Funding Fees = Entry Price (contract price per BTC) x Contract Multiplier x Order Size x Funding Rate
- Funding Rate = (Interest of Target Digital Currency - Interest of USD) / 365 days of a year / 3 times of a day
For example: a user has 2000 contracts (order size) at the contract price $6500 per BTC.
- Entry Price = 6500
- Contract Multiplier = 0.001
- Contract Size = 2000
- BTC interest rate = 10%
- USD interest rate = 2%
Funding rate = (10% - 2%) / 365 / 3 = 0.00731%
Funding Fees = $6,500 x 0.001 x 2,000 x 0.00731% = $0.9503
When the next Funding Timestamp comes, this user will need to pay $0.9503 from his margin account to Shorts.