Funding Fees
What are Funding Fees?
The latest market price refers to the most recent matched fill price on the KuCoin Futures platform. To prevent this price from deviating too far from the spot market price, KuCoin Futures uses a funding fee mechanism to anchor the latest market price to the spot price.
Funding Fee Mechanism
Funding fees are assessed once every 8 hours at UTC 04:00, 12:00, and 20:00. You need to pay or receive funding fees only if you hold a position at these specific timings. If you close your position before the funding fee occurs, you won't need to pay or receive any funding fees.
When the funding rate is positive, the long position holders pay funding fees to the short position holders. Conversely, when the funding rate is negative, the short position holders pay long position holders.
The exact times at which funding fee payments are collected may vary by up to 20 seconds.
The frequency (funding interval) at which funding fees are exchanged may be adjusted during cases of extreme market volatility. Always check official announcements for updates.
How Funding Fees Are Calculated
Funding Fee = Position Value × Funding Rate, where Position Value is determined by the mark price at the time of funding rate settlement.
For example, assume Trader A holds a long position of 10,000 XBTUSDM contracts, with a mark price of 5,000 USD at the funding fee timestamp, and a funding rate of 0.0250%.
The calculation is as follows:
Position Value = 10,000 / 5,000 = 2 BTC
Funding Fee = 2 BTC * 0.0250% = 0.0005 BTC
Since the current funding rate is positive, traders with long positions will pay those holding short positions. Therefore, Trader A will need to pay a funding fee of 0.0005 BTC, while Trader B, who holds an equal amount in short contracts, will receive a funding fee payment of 0.0005 BTC. If you close all positions before the funding fee settlement, no funding fee is payable.
How Funding Rates Are Calculated
The funding rate is calculated by using the median price in the order book and the index price:
Funding Rate = Clamp(Moving Average [{(Highest Bid Price + Lowest Ask Price) / 2 - Spot Index Price} / Spot Index Price - Interest], a, b) The current interest rate is 0.
Moving average is calculated using the total data points of the current funding interval. As data is calculated once every minute, each full funding interval includes a total of 8 * 60 = 480 data points. Values calculated within the current funding interval are taken as estimated funding rates. The value calculated at the end of the current funding interval, however, is used as the actual funding rate for funding fee settlements.
The specific parameters for a and b depend on the margin rate and may be adjusted by the official platforms in extreme market conditions:
Funding Rate Cap = (Minimum Initial Margin - Minimum Maintenance Margin) * 0.75
Funding Rate Floor = (Minimum Initial Margin - Minimum Maintenance Margin) * -0.75
For example, with an initial margin of 1% and maintenance margin of 0.5%, the maximum funding rate is: (1%-0.5%) * 75% = 0.375%. If the calculated rate F' 0.375%, the final funding rate F = 0.375%.
Traders can view historical funding rates under Funding History.
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