Comment on page
Calculation of Funding Rate
The Premium Index (P) and Interest Rate (I) is calculated on a per-minute basis. Every 1 hour, a Time-Weighted-Average-Price (TWAP) is being carried out over the prior series of minute rates.
The Funding Rate is next calculated with the 1-Hour Interest Rate Component and the 1-Hour Premium / Discount Component. A ±0.05% dampener is added.
F = P + clamp(I - P, 0.05%, -0.05%)
where F be Funding Rate, P be Premium Index and I be Interest Rate.
As shown above, if the difference between Interest Rate (I) and Premium Index (P) is between -0.05% and +0.05%, the Funding Rate (F) will be equal to the Interest Rate (I).
That is: F = P + ( I - P ) = I.
After calculation, this Funding Rate is then applied to a trader’s BTC Position Value used to decide the Funding Amount to be paid or received by the trader at the Funding Timestamp.