Q: What are funding fees?
A: Funding fees are periodic payments made between users holding long and short positions in a perpetual futures contract to ensure the contract's price closely tracks the underlying asset's market price.
Q: How often are funding fees charged?
A: Funding fees are typically charged every 8 hours in perpetual swaps contracts. However, please note that it varies between the contracts traded and it is advisable to check through the contracts page.
Q: How are funding rates calculated on Flipster?
A: Funding rates are determined by two key components: Interest Rate and Premium Index.
- Interest Rate reflects the difference in interest rates between the quote currency and the base currency.
- Premium Index measures how much the perpetual swap price deviates from the Mark Price.
The Funding Rate is calculated based on these components:
- When the Premium Index is small, the Interest Rate determines the Funding Rate.
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When the Premium Index is large, the Premium Index primarily determines the Funding Rate.
For the detailed formula, please refer to the Funding Fees Explained page.
Q: How are funding fees calculated on Flipster?
A: The funding fees are calculated as below:
Funding Fee = Notional Value of Positions * Funding Rate
Notional Value of Positions = Quantity of Contract * Mark Price
Q: Where will the funding fees be charged or received in my account?
A: Funding fees will be charged from or received directly to the position margin of the position that is impacted in the Flipster account. This would also mean that the liquidation price of the position will fluctuate according to the funding fee charged or received. It is worth for traders to monitor closely on the open position to find out the latest liquidation price and perform necessary market risk assessment.
Q: Can I avoid funding fees?
A: No, funding fees are inherent to perpetual swap contracts. However, traders can avoid funding fees if they close the open position before the next funding timestamp. Please refer to the Funding Fees Article for more information.
Q: How do I know if I am going to be charged or receiving funding fees on the next funding timestamp?
A: As a general rule of thumb, long position holders will pay short position holders when the funding rate is positive and vice versa.
Please refer to the contracts page for more information on the funding rate for each symbol on the next funding timestamp.