1. About Funding Fees
Funding fees are a core mechanism of WEEX perpetual futures.
These fees help to keep the perpetual futures price closely aligned with the spot reference price through periodic payments between long and short positions.
2. Key Details About Funding Fees
- WEEX does not charge funding fees. Fees are exchanged directly between users.
- To ensure fairness in trading, settlement times vary by trading pair. Please refer to each futures contract’s details for the exact schedule.
- Funding fees apply only if you hold a position at the settlement time. Settlements typically occur on the hour, but you should check the platform if you would like to view the specific timestamp..
- When charged, funding fees are deducted from the fixed margin of your position, up to the point where your margin ratio reaches the maintenance margin rate, plus a portion of the excess. The excess amount will not be deducted. The actual funding fee received depends on the total fees collected from counterparties.
3. Funding Fee Calculation
The funding fees you received or paid are calculated as follows:
Funding fee = funding rate × position value
Position value = face value × number of lots × latest mark price
The position value is independent of leverage and is not based on the allocated margin.
When the funding rate is positive, long positions pay funding fees to short positions. When the funding rate is negative, short positions pay funding fees to long positions.
Calculation of funding rate:
Funding rate (F) = avg premium index (P) + clamp (interest rate (I) – avg premium index (P), premium deviation floor, premium deviation ceiling)
Final funding rate = clamp (funding rate (F), funding rate floor, funding rate ceiling)
Clamp is a bounding function that restricts values to a specified range. For example, in clamp (a, max, min), if “a” is greater than max, the output is max. If “a” is less than min, the output is min. Otherwise, if “a” is within the range (for example, max ≥ a ≥ min), the output is “a.”
The "Comprehensive Interest Rate – Average Premium Index" is limited by the upper and lower premium deviation boundaries, meaning its value will always be between these two extremes. Similarly, the final predicted funding rate for the next period is constrained by the funding rate's upper and lower limits, ensuring it remains within that defined range.
The interest rate is determined by the borrowing rates of the quote currency and the base currency.
Interest rate (I) = (interest rate index of quote currency – interest rate index of base currency) ÷ funding rate interval
Premium index = premium index (P) = [max (0, depth-weighted bid – mark price) – max (0, mark price – depth-weighted ask)] ÷ spot price + fair basis of mark price
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Happy Trading,
The WEEX Team
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