BTSE uses the Funding Fee mechanism to support market fairness and help keep the perpetual futures market price close to the reference market price.
When there is a difference between the perpetual futures market price and the Index Price, funding fees are exchanged between long and short position holders.
In simple terms:
If the market is trading above the Index Price, Longs usually pay Shorts.
If the market is trading below the Index Price, Shorts usually pay Longs.
Funding Fees Settlement Time and Frequency
Funding fees are settled at the funding interval specified for each contract.
The applicable settlement interval may vary by market. Please refer to the relevant contract specifications or trading interface for the latest settings.
Funding Fees Settlement Conditions
Funding fees will only be charged or paid when both of the following conditions are met:
The funding rate is not equal to 0%.
Your position is still open at the funding fee settlement time.
If a position is closed before the settlement time, no funding fee will be charged or paid for that settlement.
Funding Fees Calculation
Funding Fee = Notional Value × Funding Rate
Notional Value = Mark Price × Position Size × Contract Multiplier
Funding rate estimates may be updated during the funding period. The final funding fee is determined using the applicable calculation methodology for that contract and funding interval.
How is the Funding Rate calculated?
The Funding Rate is calculated using two main components: the Interest Rate and the Premium Index.
First, BTSE calculates the Premium Index at regular intervals during the funding period based on the relationship between the order book and the Index Price.
The Premium Index is calculated as:
Premium Index = [Max(0, Impact Bid Price - Index Price) - Max(0, Index Price - Impact Ask Price)] / Index Price
Where:
Impact Bid Price is the average buy price derived from the order book using the configured impact margin amount.
Impact Ask Price is the average sell price derived from the order book using the configured impact margin amount.
Index Price is the reference market price used by the contract.
BTSE then collects the Premium Index series throughout the funding period and calculates the time-weighted average Premium Index for that period.
Instead of using a single snapshot, this method uses the full set of Premium Index observations across the funding window, making the final result more stable and more representative of actual market conditions.
The Funding Rate is then calculated as:
Funding Rate = Average Premium Index + Clamp(Interest Rate - Average Premium Index, 0.05%, -0.05%)
Example Calculation
Assume that during one funding period, the Average Premium Index is 0.12% and the Interest Rate is 0.03%.
Using the formula:
Funding Rate = Average Premium Index + Clamp(Interest Rate - Average Premium Index, 0.05%, -0.05%)
Step 1: Calculate the difference between the Interest Rate and the Average Premium Index:
0.03% - 0.12% = -0.09%
Step 2: Apply the clamp range of +0.05% / -0.05%:
Since -0.09% is below the lower limit, it is capped at -0.05%.
Step 3: Add the clamped value back to the Average Premium Index:
Funding Rate = 0.12% + (-0.05%) = 0.07%
So, the final Funding Rate is 0.07%.
In this example, the perpetual contract traded above the Index Price for most of the funding period, resulting in a positive Premium Index. Since the final Funding Rate is positive, Longs pay Shorts.
