What Is the Funding Rate?
The funding rate mechanism is a system in which long and short position holders periodically pay fees to one another. Its purpose is to help perpetual contract prices better reflect the underlying asset price and drive contract prices toward spot prices.
Funding fees are paid only between long and short position holders, and the exchange does not charge any fees. When the funding rate is positive, long position holders pay fees to short position holders. Conversely, when the funding rate is negative, short position holders pay fees to long position holders.
Funding fees have different settlement intervals. For contracts with an 8-hour funding rate settlement interval, settlements occur daily at 00:00 (UTC), 08:00 (UTC), and 16:00 (UTC). For contracts with a 4-hour funding rate settlement interval, settlements occur at 00:00 (UTC), 04:00 (UTC), 08:00 (UTC), 12:00 (UTC), 16:00 (UTC), and 20:00 (UTC). In addition, the platform may require several seconds to process funding fee settlements, so the actual settlement time may vary.
You can view details about a contract market's settlement interval, upper and lower limits, and more on the Contract Information page.
Funding Rate Calculation
Funding Rate Formula
Premium Index = [ Max(0, Depth-Weighted Bid Price − Index Price) − Max(0, Index Price − Depth-Weighted Ask Price)] / Index Price
Funding Rate = Clamp [(Average Premium Index + Clamp(8-Hour Interest Rate − Average Premium Index, −0.05%, 0.05%)) / (8 / N), −fmax, fmax ]
The funding rate used for final settlement is the result from the last calculation within the current interval.
Note:
- Average Premium Index: The time-weighted average of all calculated premium indexes within the current funding rate interval. It is calculated as (1 × P₁ + 2 × P₂ + … + n × Pₙ) / (1 + 2 + … + n), where P₁ is the premium index in the first minute and Pₙ is the premium index in the final minute. The closer the calculation is to the settlement time, the greater its weight.
- N is the funding rate settlement interval, measured in hours. For example, if the funding rate settles every 8 hours, then N = 8; if it settles every 4 hours, then N = 4.
- fmax and −fmax are the upper and lower funding rate limits, respectively. You can view real-time and historical funding rates on the Funding Rate page.
- The funding rate and premium index are calculated every 60 seconds.
- 8-Hour Interest Rate = Base Interest Rate / 3.
- The base interest rate for Gate cryptocurrency contracts is 0.03%; the base interest rate for traditional finance contracts is 0.
- Under extreme market conditions, Gate reserves the right to adjust funding rate limits and other parameters.
Calculation Example
Assume that the BTC_USDT perpetual contract currently has the following parameters:
| Index Price | Depth-Weighted Bid Price | Depth-Weighted Ask Price | Base Interest Rate | Settlement Interval (N) | Funding Rate Limits (fmax) |
|---|---|---|---|---|---|
| 100,000 USDT | 100,200 USDT | 100,100 USDT | 0.01% | 8 hours | ± 0.75% |
Step 1: Calculate the Current Premium Index
Premium Index = [Max(0, 100,200 − 100,000) − Max(0, 100,000 − 100,100)] / 100,000 = [200 − 0] / 100,000 = 0.02%
Step 2: Calculate the Average Premium Index
Assume that four premium indexes have been calculated during the current settlement interval: 0.005%, 0.015%, 0.025%, and 0.020%. Based on the weighted formula:
Average Premium Index = (1 × 0.005% + 2 × 0.015% + 3 × 0.025% + 4 × 0.020%) / (1 + 2 + 3 + 4) = 0.019%
Step 3: Calculate the Funding Rate
Funding Rate = Clamp [(0.019% + Clamp(0.01% − 0.019%, −0.05%, 0.05%)) / (8 / 8), −0.75%, 0.75%] = Clamp [(0.019% + (−0.009%)) / 1, −0.75%, 0.75%] = 0.010%
Depth-Weighted Price Calculation
Assume the order book is as follows, with a depth-weighted amount of 20,000 USDT.
| Order Level | Price | Quantity (BTC) | Order Value (USDT) |
|---|---|---|---|
| Ask 3 | 130,000 | 0.4 | 52,000 |
| Ask 2 | 120,000 | 0.25 | 30,000 |
| Ask 1 | 110,000 | 0.1 | 11,000 |
| Bid 1 | 100,000 | 0.05 | 5,000 |
| Bid 2 | 90,000 | 0.1 | 9,000 |
| Bid 3 | 80,000 | 0.2 | 16,000 |
Calculate the Depth-Weighted Bid Price
The order value at Bid 1 is 5,000 USDT, which is less than 20,000 USDT. Therefore, its full quantity (0.05 BTC) is used in the calculation.
The order value at Bid 2 is 9,000 USDT. The cumulative value of Bid 1 and Bid 2 is 5,000 + 9,000 = 14,000 USDT, which is still less than 20,000 USDT. Therefore, the full 0.1 BTC at Bid 2 is also included in the calculation.
The order value at Bid 3 is 16,000 USDT. The cumulative value of Bid 1, Bid 2, and Bid 3 is 5,000 + 9,000 + 16,000 = 30,000 USDT, which exceeds 20,000 USDT. The first two levels total 14,000 USDT, so 20,000 − 14,000 = 6,000 USDT is still needed from Bid 3. The BTC quantity taken from Bid 3 is 6,000 ÷ 80,000 = 0.075 BTC.
The total BTC quantity used to calculate the depth-weighted bid price is 0.05 + 0.1 + 0.075 = 0.225 BTC.
Depth-Weighted Bid Price = 20,000 ÷ 0.225 ≈ 88,888.89 USDT
Calculate the Depth-Weighted Ask Price
The order value at Ask 1 is 11,000 USDT, which is less than 20,000 USDT. Therefore, its full quantity (0.1 BTC) is used.
The order value at Ask 2 is 30,000 USDT. The cumulative value of Ask 1 and Ask 2 is 11,000 + 30,000 = 41,000 USDT, which exceeds 20,000 USDT. Since 11,000 USDT has already been used from Ask 1, 20,000 − 11,000 = 9,000 USDT is needed from Ask 2. The BTC quantity taken from Ask 2 is 9,000 ÷ 120,000 = 0.075 BTC.
The total BTC quantity included is 0.1 BTC from Ask 1 and 0.075 BTC from Ask 2. Total: 0.1 + 0.075 = 0.175 BTC.
Depth-Weighted Ask Price = 20,000 ÷ 0.175 ≈ 114,285.71 USDT
Funding Fee Calculation
Funding Fee = Position Value × Funding Rate
USDT-Margined Contracts
Position Value = Mark Price × Position Size × Contract Multiplier
Coin-Margined Contracts
Position Value = Position Size × Contract Multiplier / Mark Price
For detailed calculation examples, please refer to the How to Calculate Perpetual Contract Position Value page.
Example
Assume a user holds a long position in the BTCUSDT perpetual contract, with a position size of 10,000 contracts, a contract multiplier of 0.0001 BTC, a current mark price of 95,000 USDT, and a funding rate of 0.02% for the current interval.
USDT-Margined Contract Position Value = Mark Price × Position Size × Contract Multiplier = 95,000 × 10,000 × 0.0001 = 95,000 USDT
Funding Fee = Position Value × Funding Rate = 95,000 × 0.02% = 95,000 × 0.0002 = 19 USDT
Therefore, the user must pay a funding fee of 19 USDT for the current interval.
Funding Fee Settlement
At the end of each funding rate settlement interval, users will pay or receive the applicable funding fee based on the final funding rate. Users should monitor changes in their margin ratio to avoid forced liquidation.
In Isolated Margin mode (including Classic Contract Account, Unified Account Single-Currency Mode, and Unified Account Cross-Currency Mode), funding fees are deducted from or credited to the margin of the corresponding isolated position.
In Cross Margin mode (including Classic Contract Account, Unified Account Single-Currency Mode, Unified Account Cross-Currency Mode, and Unified Account Portfolio Margin Mode), funding fees are deducted from or credited to the balance of the relevant asset under cross margin.
In addition, the platform may require several seconds to process funding fee settlements, so the actual settlement time may vary. For example, if a trader opens a position at 00:00:00 (UTC), a funding fee may still be charged or credited, depending on whether the trader is the payer or receiver during that funding rate interval.
Contract funding fees are settled asynchronously: the system takes a snapshot of positions at the exact hour when funding fees are settled and completes the fee settlement based on the snapshot. If you close a position before settlement is complete, the funding fee will appear only in the fund flow and will not be included in the realized PnL of historical positions.
Funding Rate Parameter Adjustments
Gate periodically adjusts the upper and lower limits and settlement intervals for contract funding rates in response to market changes, and reserves the right to modify these parameters at any time.
For traditional financial products, the platform generally maintains a fixed 8-hour settlement interval. These products are not subject to the automatic funding rate settlement interval adjustment mechanism and have lower funding rate limits to ensure lower volatility.
Automatic Funding Rate Settlement Interval Adjustment Mechanism
If the funding rate for a contract market reaches its upper or lower limit at settlement, the system will automatically adjust the settlement interval for that market to 1 hour. This adjustment will not be announced in advance. If the funding rate does not reach the limit at settlement but the platform decides to adjust the settlement interval, a separate announcement will be issued.
When market conditions become more stable, the system will automatically determine whether to change the settlement interval from 1 hour to 4 hours. The following conditions must both be met:
- The current funding rate interval for the contract market is 1 hour.
- The absolute value of the funding rate is below 0.025% for 16 consecutive settlements.
Once the above conditions are met, the system will automatically adjust the settlement interval to 4 hours after the 16th settlement. This automatic adjustment will also not be announced in advance.
For other types of adjustments, such as when the automatic adjustment conditions are not met but the platform still decides to change the interval, an announcement will be issued.
Example
Using the USDT-margined BTCUSDT perpetual contract as an example, the funding rate limits are +0.3%/−0.3%, and the default settlement interval is 8 hours:
Scenario 1: Automatically Adjusted to 1 Hour
If, at settlement on 2025.07.09 08:00 (UTC), the funding rate for the BTCUSDT perpetual contract reaches +0.3% or −0.3%, the settlement interval will automatically switch to 1 hour starting from the next interval. The next settlement will take place at 2025.07.09 09:00 (UTC). This adjustment will not be announced in advance.
Scenario 2: Settlement Interval Remains Unchanged
If, at 2025.07.09 07:00 (UTC), the estimated funding rate for BTCUSDT is 0.3%, but the final funding rate at the actual settlement at 2025.07.09 08:00 (UTC) is 0.25% (the limit is not reached), the settlement interval will remain at 8 hours.
Scenario 3: Platform-Initiated Adjustment With an Announcement
If, at settlement on 2025.07.09 08:00 (UTC), the funding rate is 0.1% (the limit is not reached), but the platform decides to adjust the interval to 1 hour, an announcement will be issued in advance explaining the adjustment and its effective time.
Scenario 4: Automatically Restored to 4 Hours
Assume that the BTCUSDT perpetual contract has adopted a 1-hour settlement interval. If the absolute value of the funding rate remains below 0.025% for 16 consecutive settlements (for example, +0.01%, −0.008%, +0.015%, and so on), the system will automatically restore the settlement interval to 4 hours after the 16th settlement, without manual intervention or advance notice.
If, at the 10th settlement, the absolute value of the funding rate is 0.03% ≥ 0.025%, the consecutive count will reset to zero and begin counting again from the 11th settlement.
Disclaimer
The content provided herein is for reference and educational purposes only and does not constitute any financial, investment, trading, or legal advice, nor does it constitute an offer or solicitation to buy or sell any digital assets. Gate makes no express or implied representations or warranties regarding the accuracy, completeness, or timeliness of the information contained herein. Product features, interfaces, rules, and fee structures may be updated or adjusted at any time. Please refer to the latest announcements and the actual information displayed on the Gate platform for the most accurate details.
Digital asset investments involve significant risk, and prices may fluctuate substantially. You may lose the entire amount of your investment. Please make decisions cautiously based on your own financial situation and risk tolerance after fully understanding the associated risks. If necessary, you are advised to consult an independent professional financial or legal advisor.
For more information about potential risks, please refer to Gate's Risk Disclosure and User Agreement.
