Explanation of Funding Rate

The Function of Funding Rate

The key function of capital rate is to reduce the price difference (price regression) between the perpetual swap market and the corresponding spot market.

The crypto asset trading platform creates a mechanism to ensure that the contract price matches the index price. This mechanism is called funding rate.

What is funding rate？

Funding rate refers to the periodic fee paid to long or short traders based on the price difference between perpetual swap and the spot market. When the market trend is bullish, the funding rate is positive, and the long will pay the funding rate to the short. On the contrary, when the market is bearish, the funding rate is negative, and the short trader pays to the long.

AOFEX will not charge fees from the funding rate and the funds will be transferred directly between users。

On AOFEX, the fund fee is calculated every 8 hours, and the calculation time is GMT + 8 (the same below) at 00:00, 08:00 and 16:00. Only when the trader has a position in any direction at the time of collection, will he be charged or paid the corresponding fund fee. If the trader does not have any position at the time, he will not be charged or paid any fund fee.

Please note: there is a 15 second deviation in the actual charging time of funding fee. For example, if user A opens the position at 08:00:05 UTC, A is still charged with funding rate. Please pay attention to your opening time.

Funding rate = Clamp (MA (((buying price + selling price) / 2-spot index price) / spot index price interest), a, b)

*Interest is currently 0

Perpetual swap: a = - 3%, B = 3% funding rate is calculated once a minute. At the time of funding fee collection (08:00 / 16:00 / 24:00), the funding rate calculated at 07:59, 15:59 and 23:59 will be collected. Funding fee = position value * funding rate.

Note: the above data and indicators may be adjusted according to the market, and there is no further notice.