The funding rate mechanism facilitates periodic fee exchanges between long and short position holders to ensure perpetual contract prices closely track the underlying asset's price, promoting convergence between contract and spot prices.
Mechanism: Funding fees are exchanged solely between long and short position holders; the exchange does not charge any fees.
Positive Funding Rate: Long position holders pay short position holders.
Negative Funding Rate: Short position holders pay long position holders.
Settlement Cycles:
For contracts with an 8-hour funding fee settlement cycle, settlements occur at 00:00 (UTC), 08:00 (UTC), and 16:00 (UTC) daily.
For contracts with a 4-hour cycle, settlements occur at 00:00 (UTC), 04:00 (UTC), 08:00 (UTC), 12:00 (UTC), 16:00 (UTC), and 20:00 (UTC).