Funding fees are fees that traders need to pay or receive within a specific time period. Their main purpose is to ensure that the price of perpetual futures remains consistent with the spot market price, avoiding excessive differences between the two. Funding fees are exchanged between long and short positions based on market conditions, usually settled every 8 hours at 16:00 (UTC), 00:00 (UTC), and 08:00 (UTC). Funding fees are generated at the time of settlement, and only users holding positions at the time of settlement need to pay or receive funding fees; if the position is closed before settlement, no funding fees are required.
The funding fee for perpetual futures is calculated using the following formula:
Funding Fee = Position Value * Funding Rate
Where:
Position Value = Contract Quantity * Latest Price
Funding Rate = Average Premium Index + clamp((Interest Rate - Average Premium Index), -0.05%, 0.05%)
Premium Index = [(Future Best Bid Price + Future Best Ask Price) / 2 - Spot Index Price] / Spot Index Price, calculated every minute
Average Premium Index = (1 * Premium Index_1 + 2 * Premium Index_2 + 3 * Premium Index_3 +···+ n * Premium Index_n) / (1 + 2 + 3 +···+ n)
Premium Index_1: The first premium index data, calculated over the past N hours, where N is the funding interval, and the number of n is N*60
Please note that the funding rate here represents an estimate of the premium index over the past 8 hours. For example, starting from 09:00 UTC, the funding rate calculation will use premium index data from 01:00 UTC to 09:00 UTC (rather than from 08:00 UTC to 09:00 UTC).
Example:
Trader A holds a long position of 1 BTC contract on JuCoin, and the latest price of the BTCUSDT contract is 100,000 USDT, with a current funding rate of 0.01%.
First, we need to calculate the position value of Trader A:
Position Value = 1 x 100,000 = 100,000 USDT
Next, we can calculate the funding fee that the trader needs to pay:
Funding Fee = 100,000 x 0.01% = 10 USDT
Since the funding rate is positive (0.01%), the long position holder must pay this fee to the short position holder. Therefore, Trader A must pay a funding fee of 10 USDT, while the short position holder with the same contract quantity will receive a funding fee of 10 USDT.