How are Funding Rates calculated?
Funding Fee Calculation Examples
- COIN-M Inverse Contract
In the given example, in approximately 4 hours, long position holders will need to pay a 0.01% funding rate to short position holders.
Funding Fee is calculated as follows:
Funding Fee = Position Value x Funding Rate
Inverse Position Value = Quantity of Contract/Mark Price
For instance, let's consider Trader A holding a long position of 10,000 BTCUSD contracts, with the Mark Price at 65,000 USD and the current funding rate at 0.01%.
First, calculate the Position Value:
Position Value = 10,000 / 65,000 = 0.153846 BTC
Now, compute the Funding Fee:
Funding Fee = 0.153846 BTC * 0.01% = 0.00001538 BTC
As the funding rate is positive (0.01%), indicating long position holders must pay short position holders, Trader A will pay a funding fee of 0.00001538 BTC. Conversely, a short position holder with the same quantity of contracts will receive the same amount.
- USDT-M Linear Contract
Taking the example from the provided screenshot, long position holders are required to pay a 0.0233% funding rate to short position holders.
The Funding Fee is determined as follows:
Funding Fee = Position Value x Funding Rate
Linear Position Value = Quantity of Contract x Mark Price
For example:
Trader A holds a long position of 2 BTC contracts, with the Mark Price set at 65,000 USDT during the funding timestamp and a current funding rate of 0.0233%.
First, let's calculate the Position Value:
Position Value=2×65,000=130,000 USDT
Using the Position Value, we can now calculate the Funding Fee:
Funding Fee=130,000×0.0233%=30.29 USDT
Since the funding rate is positive (0.0233%), indicating that long position holders must pay short position holders, Trader A will need to pay a funding fee of 30.29 USDT. Conversely, a short position holder with the same quantity of contracts will receive 30.29 USDT.
How to View Your Funding Fee Records?
- WEB：
Within the Contract History, you'll find details regarding the funding fee rate and the corresponding funding fee paid. It's important to understand that a positive fee indicates that you have paid the funding fee, whereas a negative fee signifies that you are receiving the funding fee.
- APP:
Kindly refer to the screenshots below to review your funding fee history within the app.
You can review the funding rate history for all trading pairs on Phemex here
