The funding mechanism in perpetual swap contracts is used to maintain the contract price close to the spot market price of the underlying cryptocurrency.
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Funding refers to periodic interest payments exchanged between traders holding positions in perpetual swap contracts. These payments ensure the perpetual swap price remains aligned with the spot price. Traders holding long positions pay funding to traders holding short positions when ...Read more
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Funding fees are calculated based on the notional value of positions and the funding rate: Funding Fee=Notional Value of Positions×Funding Rate\text{Funding Fee} = \text{Notional Value of Positions} \times \text{Funding Rate} Funding Fee=Read more
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Suppose a trader holds a long position of 10 BTC in BTCUSDT Perpetual Swaps with a mark price of $38,000 and a funding rate of 0.01%: Notional Value of Positions=10×$38,000=$380,000\text{Notional Value of Positions} = 10 ...Read more
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To ensure stability, Flipster imposes cap and floor rates on the funding rate: −0.375%≤Funding Rate≤0.375%-0.375\% \leq \text{Funding Rate} \leq 0.375\% −0.375%≤Funding RateRead more