1.1 Perpetual Swap Overview
Perpetual swap is a kind of derivatives similar to leveraged spot trading, while it differs from
traditional futures in the following aspects:
With no expiration date, there is no limit on position-holding duration.
With the purpose of tracking price index of the underlying, funding cost mechanism is in place
to make sure perpetual swap price closely follow that of the underlying assets.
1.2 Perpetual Swap Market Mechanism
When trading perpetual swap, understanding of the market mechanism is necessary for traders.
Key points are :
- Position Marking : Perpetual swap adopts reasonable pricing marking. Marked price determines
unrealized profit/loss and force liquidation price.
- Initial Margin : It decides the leverage that you can use to open a position.
- Maintenance Margin: It is the margin level required to maintain the minimum level of a
- Funding Cost : Perpetual swap has no expiration date and will not be delivered, thus “Funding
Cost” is in place to ensure contract price is anchored by spot market. The buyer and seller pay
the fee periodically every 8 hours. If the funding rate is positive, long positions will pay the
funding and short positions will get it; if the funding rate is negative, vice versa.
Please note that you only need to pay or collect funding cost if you hold a position at funding timestamp. The funding cost is completely settled between users, and the platform will not charge anything.
The timestamp of funding cost: 00:00 Singapore time, 08:00 Singapore time, 16:00 Singapore
The current funding rate can be found at the top indicator bar of the Market page named
1.3 Funding Cost
Calculation of Funding Cost
Funding cost is the core operating mechanism of perpetual swap.
Funding occurs at 00:00 Singapore time, 08:00 Singapore time, and 16:00 Singapore time.
The calculation formula of the funding cost to be collected or paid by you is as follows:
Funding Cost = Funding Rate * Position Value
Your position value has nothing to do with leverage. For example, if you hold 100 BTCUSDT
contract, funding cost will be collected / paid based on the nominal value of the contract, rather
than how much margin you allocated to the position.
Calculation of Funding Cost Rate
Funding cost rate consists of two parts: the interest rate and premium/discount. The purpose of
such a rate is to ensure that the trading price of the perpetual swap follows an underlying
reference price closely. In this way, the perpetual swap is similar to the margin trading spot
market where buyers and sellers exchange funding cost rates on a regular basis.
The interest rate depends on the borrow-lending rate of monetary base and pricing currency.
Interest rate (I) = (pricing interest rate index - basic interest rate index) / the interval of funding
Sometimes, the price of a perpetual swap has a significant premium or discount compared with
a marked price. In such a case, the premium index will be used to raise or lower the next funding
cost rate for it to match the trading level of the current perpetual swap. The premium index of
every kind of perpetual swap can be referenced in relevant pages, and the corresponding
calculation is as follows:
Premium index (P) = reasonable basis of (Max(0, depth weighted buying price - marked price) -
Max(0, marked price -depth weighted selling price)) / spot price + marked price
After determining the premium index, we set a buffer limit of 0.05% to funding cost rate, so:
Funding cost rate (F) = premium index (P) + clamp (interest rate (I) - premium index (P), 0.05%, -
When I-P is within the range, funding cost rate F = I. in such case, we call it “normal value”,
which means that funding cost rate is within the most stable range.
Limit of Funding Cost
The caps of funding cost rate ensure that the highest leverage can be used. In order to achieve
so, we add two limits:
Absolute upper limit of funding cost rate is 75% * (initial margin - maintenance margin). If initial
margin is 1% and maintenance margin is 0.5%, maximum funding cost rate will be 75% * (1% -
0.5%) = 0.375%.
The change of funding cost rate within the interval of funding cost shall not exceed 75% of the
That is, |F1-F2|<=maintenance margin * 75%, F1 and F2 are two consecutive funding cost rates.
The platform does not charge any funding cost. Instead, funding cost is charged among users.
contract trading fees: