Funding Rate
The funding rate is a fee rate set by Gate to maintain the balance between the contract price and the price and the underlying assets price, typically applied to perpetual contracts. It serves as a mechanism for fund transfers between long and short traders. This fee is not collected by the exchange but is used to adjust the cost or profit of holding contracts, ensuring that the contract price remains close to the underlying assets price.
- Funding is settled periodically to align the contract price and the spot price.
- The direction of fund transfers between long and short positions is determined by whether the funding rate is positive or negative.
When the perpetual contract price deviates from the price of the underlying assets, the exchange will adjust the funding rate to make longs or shorts pay funds to each other, bringing the contract price back to the underlying assets price.
When the market trend is bullish, the funding rate is usually positive and increases over time. In this case, longs pay shorts.
Conversely, when the market is bearish, the funding rate is typically negative, and shorts pay longs.
If the funding rate is 0.00%, no funding needs to be settled between longs and shorts.
Generally, the maximum funding rate for Bitcoin is capped at 0.375% and the minimum at -0.375%, though there may be slight differences across exchanges.
Note
- The funding rate settlement interval for certain trading pairs is 4 hours.
- The funding rate settlement interval can be checked on the Contract Details page.
Funding Rate and Funding Calculations
Funding Rate Calculation
Premium Index = [Max (0, Impact Bid Price - Index Price) - Max (0, Index Price - Impact Ask Price) ] / Index Price
Funding Rate = Weighted Average Premium Index + clamp (Interval Interest - Premium Index, 0.05%, -0.05%)
Final Funding Rate = clamp (8-Hour Average Funding Rate, fmax, -fmax), where fmax = (Initial Margin - Maintenance Margin) x 75%.
- The premium index is calculated every 60 seconds.
- Gate’s default interest rate is 0.03% per day. If fees are settled every 8 hours, the interval interest will be 0.01%, and so on.
- For the fmax calculation, the default value for the parameter is 75%, but risk management may adjust it based on market conditions.
- If the price deviation exceeds the maintenance margin level of the contract, the market is considered abnormal, and the price variance will not be included in the funding rate. Instead, it will be settled at the default rate of 0.01%.
- Gate reserves the right to adjust the upper and lower limits of the funding rate under extreme market conditions.
Funding Calculation
Funding = Nominal Position Value x Funding Rate
Nominal Position Value = Mark Price x Contract Size (For USDT Perp)
The funding rate is settled every 4 or 8 hours (at 00:00, 08:00, and 16:00 UTC) at settlement time.
Note
- Leverage is not considered when calculating funding. The current position value is used, regardless of leverage.
- If the funding rate is positive, longs pay shorts; if negative, shorts pay longs.
- Gate settles funding three times a day at 00:00, 08:00, and 16:00 UTC. The position value at these times is used. If you do not hold a position at the settlement time, you are not included in the settlement. (For certain trading pairs with a 4-hour funding rate settlement interval, fundings are settled 6 times a day, and the funding rate settlement interval can be viewed on the Contract Details page.)
Example
Assume a user holds a short position in an ETH/USDT contract with a position value of 23.10 USDT. The current funding rate is 0.01%, and there are 12 minutes left until settlement. If the final funding rate remains at 0.01% at settlement time, the funding can be calculated as:
Funding = Position Value x Funding Rate = 23.10 × 0.01% = 0.00231 USDT
Since the funding rate is positive, this user will receive 0.00231 USDT, while a user holding the same position on the long side will need to pay 0.00231 USDT.
Gate reserves the final right to interpret the product.
For further assistance, please visit the Gate official support page or contact our customer support team.
