Part 1: What is the Funding Rate
The funding rate is a periodic fee paid between long and short positions, and it is not charged by the platform. Its purpose is to keep the contract price closely aligned with the spot price and prevent excessive deviation between the two.
Part 2: Why There Are Positive and Negative Rates
When long positions dominate and the contract price is higher than the spot price, the rate is positive — long position holders need to pay fees to short position holders. When short positions dominate and the contract price is lower than the spot price, the rate is negative — short position holders need to pay fees to long position holders. The dominant side in the market pays the fee to balance the market.
Part 3: Settlement Time and Calculation Method
Under normal circumstances, the funding rate is settled every 8 hours. Calculation formula: Funding Fee = Position Value × Funding Rate. The higher the position value, the more fees you will pay or receive.
Part 4: Practical Calculation Example
For example, if you hold 1 BTC contract with a price of 50000 USDT and a funding rate of 0.01%, the funding fee = 50000 × 0.01% = 5 USDT. If the rate is positive, you need to pay 5 USDT; if the rate is negative, you will receive 5 USDT.
Part 5: How Funding Fees Are Deducted
Funding fees are directly deducted from the position margin. If the margin is insufficient to cover the fees, the system will deduct partially, which may trigger liquidation risk in severe cases.
Part 6: How to Manage Funding Fees
How to reduce the impact of funding fees? Adopt short-term holding strategies to avoid multiple settlements; pay close attention to rate changes and avoid holding long positions when rates are high; or hold short positions when the funding rate is negative to reduce the risk of paying fees.
Risk Warning
The funding rate fluctuates with market sentiment and may surge sharply during volatile market conditions. Please check the current rate before trading and plan your holding period rationally.