Perpetual Futures on One Trading include a funding rate, a periodic payment exchanged every 4 hours between long and short position holders. This mechanism helps align the perpetual contract's price with the underlying asset's spot price. One Trading does not charge fees on the funding rate.The funding rate consists of:Premium Index: This represents the difference between futures and spot prices. When futures trade at a premium, the long position pays funding to the short position, encouraging more shorts and fewer longs, thus converging prices. Conversely, when futures trade at a discount, the short position pays funding to the long position.
Given the Mark Price and Index Price, the premium index ( P ) series is calculated every 1 minute using the following equation:where the Index Price is the weighted average spot price of the underlying asset listed on major spot exchanges.
The time-weighted average premium index ( Pˉ ) is calculated over the funding period using the premium index series:where Pt denotes the t-th 1-minute observation of P, wt=w0+αt is the weight for each observation (with w0 being the starting weight and α being the scalar step increase), and T is the total number of 1-minute intervals within the 4-hour period.
The preliminary funding rate is calculated as:where β is the clamp boundary parameter.The clamp function ensures a value stays within a specified range by limiting it to the nearest boundary if it would go outside that range:Clamping ensures that the dampening adjustment (-Pˉ) stays within (-β%) and (+β%). This means:
If (-Pˉ) is less than (-β%), it will be set to (-β%)
If (-Pˉ) is between (-β%) and (+β%), it will remain unchanged
If (-Pˉ) is greater than (+β%), it will be set to (+β%)
Finally, a cap is applied to the funding rate to determine the final funding rate:where τ is the maximum absolute value allowed for the funding rate, ensuring the rate stays within reasonable bounds.
