What is Funding Rate?
CoinW's perpetual futures do not have an expiry or delivery date. Instead, we implement a funding rate mechanism to peg the perpetual futures market price to the spot price. When there is a discrepancy between the perpetual futures market price and the spot market price, position holders are required to pay a certain funding fee to their counterparties periodically.
When the funding rate is positive, long traders will pay short traders, and vice versa. This mechanism helps to keep the perpetual futures price close to the spot price, preventing significant market imbalances. The payment of funding fees ensures that contract prices closely follow the spot market, maintaining stable market operations.
Funding Rate Settlement
(1) Settlement Cycle: Funding fees are calculated every minute and normally collected every 8 hours, at 00:00, 8:00, and 16:00 (UTC) each day. In the event of extreme market volatility, CoinW may adjust these intervals, and such payments will only be collected from positions held at the time of settlement.
(2) Settlement: When the funding rate for a trading pair is positive, long position holders must pay short position holders, and vice versa.
(3) Impact of Funding Rate: For cross-margin positions, funding rate payments will be added to or deducted from your futures account balance. For isolated margin positions, funding rate payments will be added to or deducted from the margin for your respective positions. Your margin rate will be impacted by these periodical funding rate payments.
Note: CoinW only helps facilitate the exchange of funding rate payments between long and short position holders. CoinW does not charge any service fees.
Calculating Funding Rate Payments
Funding Rate Payments = Position Value * Current Funding Rate.