Funding Rate
Funding Rate and Funding Fee
The funding rate mechanism facilitates periodic fee exchanges between long and short position holders to ensure perpetual contract prices closely track the underlying asset's price, promoting convergence between contract and spot prices.
Mechanism: Funding fees are exchanged solely between long and short position holders; the exchange does not charge any fees.
Positive Funding Rate: Long position holders pay short position holders.
Negative Funding Rate: Short position holders pay long position holders.
Settlement Cycles:
For contracts with an 8-hour funding fee settlement cycle, settlements occur at 00:00 (UTC), 08:00 (UTC), and 16:00 (UTC) daily.
For contracts with a 4-hour cycle, settlements occur at 00:00 (UTC), 04:00 (UTC), 08:00 (UTC), 12:00 (UTC), 16:00 (UTC), and 20:00 (UTC).
Funding Rate Calculation
Formula
Funding Rate = Premium Index Average + clamp(Interval Interest - Current Premium Index, 0.05%, -0.05%)
Premium Index: Premium Index = [Max(0, Depth-Weighted Bid Price - Index Price) - Max(0, Index Price - Depth-Weighted Ask Price)] / Index Price
Premium Index Average: The arithmetic average of all premium indices calculated within the current funding rate cycle.
Final Funding Rate at Settlement: Final Funding Rate = clamp(8-Hour Funding Rate Average, f_max, -f_max)
Calculation Frequency: Funding rate and premium index are calculated every 60 seconds.
Preset Interest Rate: ADEN uses a daily interest rate of 0.03%. For an 8-hour settlement cycle, the interval interest is 0.01%, and so forth for other cycles.
Depth-Weighted Price Calculation
Assume an order book with a depth-weighted amount of 20,000 USDT.
Ask Tier 3
130,000
0.4
52,000
Ask Tier 2
120,000
0.25
30,000
Ask Tier 1
110,000
0.1
11,000
Bid Tier 1
100,000
0.05
5,000
Bid Tier 2
90,000
0.1
9,000
Bid Tier 3
80,000
0.2
16,000
Depth-Weighted Bid Price
Bid Tier 1: Order amount = 5,000 USDT (< 20,000 USDT), so the full quantity (0.05 BTC) is included.
Bid Tier 2: Order amount = 9,000 USDT. Cumulative amount (Bid 1 + Bid 2) = 5,000 + 9,000 = 14,000 USDT (< 20,000 USDT), so the full quantity (0.1 BTC) is included.
Bid Tier 3: Order amount = 16,000 USDT. Cumulative amount (Bid 1 + Bid 2 + Bid 3) = 5,000 + 9,000 + 16,000 = 30,000 USDT (> 20,000 USDT). Since the first two tiers account for 14,000 USDT, an additional 6,000 USDT is needed from Bid 3.
BTC allocated from Bid 3: 6,000 ÷ 80,000 = 0.075 BTC.
Total BTC for Bid Price: 0.05 + 0.1 + 0.075 = 0.225 BTC.
Depth-Weighted Bid Price: 20,000 ÷ 0.225 ≈ 88,888.89 USDT.
Depth-Weighted Ask Price
Ask Tier 1: Order amount = 11,000 USDT (< 20,000 USDT), so the full quantity (0.1 BTC) is included.
Ask Tier 2: Order amount = 30,000 USDT. Cumulative amount (Ask 1 + Ask 2) = 11,000 + 30,000 = 41,000 USDT (> 20,000 USDT). Since Ask 1 accounts for 11,000 USDT, an additional 9,000 USDT is needed from Ask 2.
BTC allocated from Ask 2: 9,000 ÷ 120,000 = 0.075 BTC.
Total BTC for Ask Price: 0.1 + 0.075 = 0.175 BTC.
Depth-Weighted Ask Price: 20,000 ÷ 0.175 ≈ 114,285.71 USDT.
Funding Fee Calculation
Formula: Funding Fee = Position Value × Funding Rate
Position Value
USDT-Margined Contracts: Position Value = Mark Price × Position Quantity × Contract Multiplier
Coin-Margined Contracts: Position Value = Position Quantity × Contract Multiplier / Mark Price
Example
Assume a user holds a long position in the BTCUSDT perpetual contract:
Position Quantity: 10,000 contracts
Contract Multiplier: 0.0001 BTC
Mark Price: 95,000 USDT
Funding Rate: 0.02%
Position Value (USDT-Margined): 95,000 × 10,000 × 0.0001 = 95,000 USDT Funding Fee: 95,000 × 0.02% = 95,000 × 0.0002 = 19 USDT
The user pays a funding fee of 19 USDT.
Funding Fee Settlement
At the end of each funding rate settlement cycle, users pay or receive funding fees based on the final funding rate. Users should monitor their margin ratio to avoid liquidation.
Isolated Margin Mode (including classic contract accounts, unified single-currency accounts, or unified cross-currency accounts): Funding fees are deducted from or credited to the margin of the corresponding isolated position.
Cross-Margin Mode (including classic contract accounts, unified single-currency accounts, unified cross-currency accounts, or unified portfolio margin mode): Funding fees are deducted from or credited to the equity of the corresponding asset in the cross-margin account.
Automatic Adjustment of Funding Rate Settlement Cycle
Trigger for Adjustment: If the funding rate reaches its upper or lower limit at settlement, the system automatically adjusts the settlement cycle to 1 hour for that market without prior announcement.
Non-Automatic Adjustment: If the funding rate does not reach the limit but the platform decides to adjust the cycle, an announcement will be issued with details on the change and implementation time.
Example (USDT-Margined BTCUSDT Perpetual Contract)
Funding Rate Limits: +0.3% / -0.3%
Default Settlement Cycle: 8 hours
Scenario 1: Automatic Adjustment
At 16:00 (UTC+8) on July 9, 2025, if the BTCUSDT funding rate reaches +0.3% or -0.3%, the settlement cycle automatically adjusts to 1 hour starting from the next cycle (e.g., next settlement at 17:00 UTC+8 on July 9, 2025). No announcement is issued.
Scenario 2: No Automatic Adjustment
At 15:00 (UTC+8) on July 9, 2025, the BTCUSDT funding rate is 0.3%. At 16:00 (UTC+8), it drops to 0.25%, not hitting the limit. The settlement cycle remains 8 hours.
Scenario 3: Proactive Adjustment with Announcement
At 16:00 (UTC+8) on July 9, 2025, the BTCUSDT funding rate is 0.1%, not hitting the limit. If the platform decides to adjust the cycle to 1 hour, an announcement will be issued detailing the change and implementation time.
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