In perpetual contracts, Funding Fees are an important mechanism for anchoring the spot market price. Also, the funding fees are generated every 8 hours during the trading period. You will only pay or receive funding if you hold a position at one of these times. If you close your position before the funding cost is generated, you will not pay or receive funding fees.
When the funding rate is positive, users who hold long positions need to pay the funding cost for other users who hold short positions. Conversely, when the funding rate is negative, the short position holder needs to pay the funding cost for the long position holder.
In order to anchor the perpetual contract trading price to the spot price, the funding mechanism is to ensure TruBit Pro's last traded price is always anchored to global standard index prices.
If the funding rate is positive (0.0XX%), the long position holders have to pay the fee to short position holders.
If the funding fee is negative (−0.0XX%), short position holders will have to pay the fee to long position holders.
Funding Fee = Position Value * Funding Rate
Note that the value of your position is irrelevant to leverage.
"If you hold a 100USDT BTCUSDT contract, funding will be charged/received at the notional value of position, not based on how much margin you have assigned to that position".
Funding Rate Calculation
This rate ensures the contract trading price follows the spot market Index Price. The funding rate will be calculated by sampling the deviation and the price premium between the contract price and the spot market index price and will be updated every 1 hour.
Funding Rate = MA [ (Contract Price - Index Price)/Index Price]/Adjustment Coefficient
MA: The general setting is 60, which means the system will use the average price premium in the last 60 minutes by default.
The adjustment coefficient is used to reduce the price premium distortion caused by contract tick disparity. Currently, the adjustment coefficient on all contracts available in TruBit Pro is set to 1 by default. (TruBit Pro may proceed to change the adjustment coefficient according to the actual situation of the contract without prior notice.)
Funding Rate Intervals
Funding Rate range is [-0.375%,0.375] for contracts with 125x maximum leverage;
Funding Rate range is [-0.75%,0.75] for contracts with 50x maximum leverage.
TruBit Pro does not charge any funding fees; funding fees are exchanged between users who hold positions at the Timestamp.
The Funding fees will first be deducted from the available balance in the contract account if it's sufficient to cover the payment.
When the available balance in the account is not sufficient, the system will cancel those pending orders and then deduct the available funds.
In Isolated Margin mode, if the available balance is insufficient, the system will deduct the actual and added margin of current positions in order, while in Cross Margin Mode, the system still deducts the account balance even if the available balance is insufficient. In either case, the payment of funding fees will affect the liquidation price of related positions.
If you have questions regarding this information, please contact the TruBit Team via our chat channel or email us Here and we'll be in touch!