Funding Calculation

8-Hour Funding Rate Formula

Funding Rate = clamp[
  (Average Premium Index) + clamp(Interest Rate, 0.05%, -0.05%),
  0.05% (max),
  -0.05% (min)
]

Components

Premium Index (P):

• Measures perpetual price difference from spot.

• Time-weighted average over 8-hour window.

• If Positive: Longs pay Shorts.

• If Negative: Shorts pay Longs.

Interest Rate (I):

• Default: 0.01% per 8-hour period.

• Can increase to 0.05% if market is extremely skewed.

Funding Fee Calculation

Formula:

Funding Fee = Position Value × Funding Rate
Position Value = Quantity × Mark Price

Example: You hold 1 BTC Long ($50,000 value). Funding Rate is 0.02%. Fee = $50,000 * 0.0002 = $10. You pay $10.