Introduction to Futures Funding Fees

About Funding Fees

1. Basic Concept

CoinEx perpetual contracts have no expiration or settlement date. Instead, a funding-fee mechanism keeps the contract price aligned with the spot price.

2. Why is the Funding Rate Important?

The funding rate is a key cost component in futures trading. Understanding it helps traders estimate holding costs, identify better entry points, and avoid unnecessary expenses.

How Funding Fees Are Settled

1. Default Settlement Cycle

(1) Funding fees are calculated every minute and are generally settled every 8 hours.

(2) Settlements occur daily at 00:00, 08:00, and 16:00 (UTC). Only users holding positions at the settlement time will pay or receive funding fees.

2. Dynamic Settlement Cycle

(1) When the premium index repeatedly hits the upper or lower limits, the settlement cycle may be dynamically shortened to 4 hours or 2 hours.

(2) In the futures market, if the 1-hour arithmetic average premium index exceeds the funding rate upper or lower limit for 4 consecutive hours, the system shortens the settlement cycle by one level within the current cycle (8h → 4h → 2h). Each adjustment has an 8-hour cooldown period.

(3) When the funding rate hits the limits set by CoinEx, the settlement frequency may be temporarily increased (e.g., from every 8 hours to every 4 hours). The system will continue to settle at the adjusted frequency and enter an observation period (usually 24 hours).

• If thresholds are hit again during the observation period, the observation period restarts.
• If not hit within 24 hours, the settlement cycle will gradually revert stepwise back toward the default cycle.

3. Direction of Payment

Whether a user pays or receives funding depends on the funding rate for that period and the user’s position. Only users holding positions at settlement will pay or receive funding fees.

• If the funding rate > 0: Longs pay shorts.
• If the funding rate < 0: Shorts pay longs.

Note: Funding fees are transferred directly between long and short traders. CoinEx does not charge any fees for funding payments.

4. Fee Collection Rules

Factors Affecting the Funding Rate

1. Market sentiment: Rates tend to be positive when longs are dominant and negative when shorts are dominant.

2. Arbitrage activity: Large price discrepancies attract arbitrageurs, which helps pull the funding rate back toward equilibrium.

3. Exchange rules: The specific calculation may vary slightly across platforms (e.g., interest rate components).

Tips for Beginners

1. Before opening a position: Check the current funding rate and estimate the 8-hour holding cost. Avoid opening positions when the funding rate is excessively high.

2. While holding a position: Monitor the sign and magnitude of the funding rate. Consider adjusting your holding period to avoid high funding intervals. It is recommended to review your position 15 minutes before settlement.

3. Long-term holding: Accumulated funding costs should be considered for long-term positions. In extreme market conditions, funding rates may increase significantly. Use high leverage cautiously.

Advanced Information

1. Related Concepts

• Premium Index: The deviation of the contract price from the spot price.
• Depth-Weighted Price: A weighted average price calculated based on market depth.
• Maintenance Margin Rate: The minimum margin ratio required to avoid forced liquidation.

2. Calculation Formulas (For Reference Only)

(1) Theoretical Funding Fee = Position Size × Mark Price × Funding Rate

(2) Funding Rate (F) = clamp(Average Premium Index (P+) + clamp(Interest Rate (I) − Average Premium Index (P+), ±d), a, b)

• Fixed Interest Rate (I) = 0
• Premium Index (P) = ((Depth-Weighted Bid Price + Depth-Weighted Ask Price) / 2 − Spot Index Price) / Spot Index Price
• Average Premium Index (P+) = The arithmetic average of all premium index values from N hours ago to the current time

*The variables “a” and “b” are the upper and lower limits of the funding rate; “d” is the added buffer coefficient (0.03%); “N” is the time interval in hours for collecting funding fees.

(3) Funding Rate Limits

• Lower limit (a) = −0.75 × Minimum maintenance margin rate
• Upper limit (b) = 0.75 × Minimum maintenance margin rate
• For specific margin ratios, please refer to the CoinEx Futures Information page.

*BTCUSDC and ETHUSDC markets have special limits set at ±0.75%.

(4) Depth-Weighted Price

• Margin Impact Amount = Maximum position size available at the minimum maintenance margin rate × 0.01
• The variable “p” is the quantity (or contracts) of the base asset (assuming the nth level quantity equals pn), and “q” is the quote asset price.
  • USDT-Margined Contracts: Depth-weighted price = (p1 * q1 + p2 * q2 + ... + pn * qn) / Margin Impact Amount, where p1 + p2 + ... + pn = Margin Impact Amount (unit: BTC, ETH, etc.)
  • Coin-Margined Contracts: Depth-weighted price = Margin Impact Amount / (p1/q1 + p2/q2 + ... + pn/qn), where p1 + p2 + ... + pn = Margin Impact Amount (unit: contracts)

Note: The above data and indicators may be adjusted in real time based on market conditions without further notice.