At OKX, perpetual futures contracts utilize a funding fee mechanism to align the market price of the contract with the underlying index price. This system ensures fair pricing and incentivizes traders to maintain balanced positions.
👉 Learn how perpetual futures work
How Funding Fees Work
Funding fees are periodic payments exchanged between traders holding long and short positions:
- Positive Funding Rate: Traders with long positions pay funding fees to those with short positions.
- Negative Funding Rate: Short position holders pay funding fees to long position holders.
Key Notes:
- OKX facilitates these transfers without charging additional service fees.
- Payments occur every 8 hours (7:00, 15:00, and 23:00 Vietnam Time) unless specified otherwise (e.g., 1, 2, or 4-hour intervals).
- Positions open at the fee assessment time incur funding fees; closed positions are exempt.
- Delisting a contract before fee calculation voids the current funding cycle.
Funding Rate Calculation (Initial Method)
The funding rate is determined by:
Funding Rate = Clamp [MA (Premium Index - Interest Rate), Funding Rate Ceiling, Funding Rate Floor]Where:
- Premium Index = [(Best Bid + Best Ask)/2 - Index Price] / Index Price
- MA = 8-hour moving average of the premium index
- Clamp restricts values between predefined ceilings/floors
Example: The rate at 07:59 uses minute-by-minute premium index data from 00:00-07:59 (n=480 data points).
Revised Funding Rate Calculation (Three-Phase Update)
The updated formula incorporates:
Funding Rate = Clamp [Avg Premium Index + Clamp (Interest Rate - Avg Premium Index, 0.05%, -0.05%), Ceiling, Floor]Where:
Interest Rate = 0.03%/(24/Payment Interval)
- For BTCUSDT at 8-hour intervals: 0.01% per payment
- Impact Price = Average execution price to fulfill the Impact Margin Notional Value (IMNV)
Impact Price Calculation Example (BTCUSDT):
| Order Book Level | Bid Price | Base Amount (BTC) | Calculation |
|---|---|---|---|
| 1 | 90,000 | 0.02 | IMNV = 20,000 USDT requires 0.02 BTC @90,000 (1,800 USDT) |
| 2 | 89,900 | 0.06 | Additional 7,194 USDT (total 8,994 USDT) |
| 3 | 89,700 | 0.16 | Remaining 12,806 USDT requires 0.14276 BTC |
| Impact Bid Price | 89,780.8 | = Total IMNV / Total BTC |
Funding Fee Computation
Funding Fee = Position Value × Funding RateUSDT-Margined Contracts
Position Value = Contract Qty × Contract Size × Mark PriceExample: 10 BTCUSDT longs @60,000 Mark Price
= 10 × 0.01 × 60,000 = 6,000 USDT
Fee at 0.1% = 6 USDT
Crypto-Margined Contracts
Position Value = Contract Qty × Contract Size / Mark PriceExample: 100 ETHUSD shorts @4,000 Mark Price
= 100 × 10 / 4,000 = 0.25 ETH
Fee at 0.1% = 0.00025 ETH
Funding Fee Collection & Distribution
| Process | Details |
|---|---|
| Collection | - Deducted fully even if below liquidation threshold - Isolated Margin: Taken from position margin - Cross Margin: Taken from cross-margin equity |
| Distribution | - Credited to recipient's account - Isolated positions: Added to position margin - Cross Margin: Added to cross-margin equity |
FAQs About Funding Fees
Q: When exactly are funding fees charged?
A: Assessments occur precisely at 7:00, 15:00, and 23:00 Vietnam Time, with processing potentially taking up to 1 minute.
Q: Can I avoid paying funding fees?
A: Yes - close your position before the assessment time. Fees only apply to open positions at the exact calculation moment.
Q: Why do funding rates sometimes turn negative?
A: Negative rates occur when short positions outweigh longs, incentivizing traders to balance the market.
Q: How is the 8-hour moving average calculated?
A: It's the weighted average of minute-by-minute premium index values over the last 8 hours (480 data points).
Q: What happens if I don't have enough margin for the fee?
A: The platform will still collect the fee, potentially triggering liquidation if margin becomes insufficient afterward.
Q: Are funding fees taxable?
A: Tax treatment varies by jurisdiction. Consult a tax professional regarding your specific situation.
This comprehensive guide clarifies OKX's funding fee mechanism for perpetual futures, covering calculation methods, payment schedules, and practical examples. Understanding these concepts helps traders manage costs effectively in derivatives markets. For the most current rates and policies, always refer to OKX's official documentation.