Funding Rate — Funding consists of regular payments between buyers and sellers, according to the current funding rate. When the funding rate is above zero (positive), traders that are long (contract buyers) have to pay the ones that are short (contract sellers). In contrast, negative funding rates means that short positions pay longs. When a perpetual futures contract is trading higher than the spot markets, long positions have to pay shorts due to a positive funding rate. Such a situation is expected to drive the price down, as longs close their positions and new shorts are opened.
On the Digitex exchange funding occurs every 8 hours at 00:00, 08:00, 16:00 UTC.
If a trader holds a position, he will pay or receive payout value.
Funding rate depends from Premium Index (PI)
PI = [Max * (0, IBP-FP) / FR] - [ Max * (0,FP-IAP) / FP]
PI is calculated each minute.
where: IBP (Impact Bid Price) - Bid price for BTC
IAP (Impact Ask Price) - Ask price for BTC
and Fair Price (FP):
Fair price = Spot Price [1+Funding Rate * ( Time Until Funding /8 hours)]
Funding Rate*= TAPI + clamp *(I - TAPI, 0.05%, - 0.05%)
where: I = 0.01%, TAPI that are average PI for previoгs trading period.
Funding Rate= сap * [Funding Rate*, (+)(-)0.75immm]
where: im=1%, mm=0.5
The value that trader must pay or receive at the moment of funding, depends from number of contracts in trader’s position.
Payout value = q * Payout
Payout = (Funding Rate *Perpetual Price) / Tick Index, that is rounded to 10-4
Perpetual Price = avg Price for last 1000 traded contracts
When a trader receives funds, payout value are added to the balance.
When a trader paid funds, payout value are withdrawn from the position margin and from balance.
Please pay attention that when a trader is paying, funds are being withdrawn from the position margin which leads to change in liquidation price (Liquidation price shifts closer to Entry Price).
If a trader's margin reaches 0 or in other words liquidation price becomes equal to Entry Price - his position will be liquidated.