According to market data, Ethereum has experienced significant growth recently, with its price reaching $1,838.1 at the time of writing. This surge has drawn increasing attention from investors, particularly toward Ethereum perpetual contracts in the derivatives market.
Perpetual contracts allow traders to leverage their capital and profit from both upward and downward price movements, making them highly appealing. However, many investors remain unclear about the fee structure for ETH perpetual contracts.
How Are ETH Perpetual Contracts Charged?
The funding rate for perpetual contracts varies across exchanges. For instance:
- Huobi: 0.02%–0.05%
- OKEx: 0.015%–0.02%
Below is the funding fee calculation formula used by OKEx:
Funding Fee = Position Value × Current Funding Rate
- Positive Funding Rate: Long positions pay short positions.
- Negative Funding Rate: Short positions pay long positions.
Funding Rate Formula:
Funding Rate = Clamp(MA(((Contract Bid + Contract Ask)/2 - Spot Index Price)/Spot Index Price - Interest), a, b) (Interest is currently 0; for all perpetual contracts: a = -0.3%, b = 0.3%)
1. Unrealized P&L
Unrealized profit and loss reflect the current盈亏 of open positions, fluctuating with the latest成交 price.
Long Position Unrealized P&L:
(1/Entry Price - 1/Latest Price) × Contract Quantity × Contract Face ValueShort Position Unrealized P&L:
(1/Latest Price - 1/Entry Price) × Contract Quantity × Contract Face Value
Example: Holding 100 BTC perpetual contracts (face value = $100) with an entry price of $5,000. If the latest price is $8,000:
Unrealized P&L = (1/5000 – 1/8000) × 100 × 100 = 0.75 BTC 2. Realized P&L
Realized P&L accounts for closed positions, trading fees, and funding rate adjustments.
Long Position Realized P&L:
(1/Entry Price - 1/Closing Price) × Closed Contracts × Face ValueShort Position Realized P&L:
(1/Closing Price - 1/Entry Price) × Closed Contracts × Face Value
Example: Closing 100 BTC contracts (entry $5,000) at $4,000:
Realized P&L = (1/5000 – 1/4000) × 100 × 100 = –0.5 BTC What Factors Influence ETH Perpetual Contract Funding Rates?
Funding rates comprise:
Interest Rate:
- Binance uses a 0.03% daily fixed rate (0.01% per funding interval), except for LINK/USDT and LTC/USDT (0%).
Premium:
- Reflects the price difference between perpetual contracts and the mark price.
- High volatility widens the premium; low volatility narrows it.
- Positive Funding Rate: Perpetual price > Mark price → Longs pay shorts.
- Negative Funding Rate: Perpetual price < Mark price → Shorts pay longs.
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High leverage amplifies the impact of funding rates, potentially leading to liquidation even in stable markets.
FAQs
1. How often are funding fees charged?
Most exchanges charge funding fees every 8 hours.
2. Can funding rates be negative?
Yes, negative rates occur when perpetual prices trade below the mark price, requiring shorts to pay longs.
3. Why do funding rates vary across exchanges?
Exchanges use different formulas and parameters (e.g., interest rates, clamping ranges).
4. How does leverage affect funding costs?
Higher leverage increases exposure to funding payments, impacting overall profitability.
5. Is it possible to avoid funding fees?
No, but traders can minimize costs by timing positions around funding intervals or selecting contracts with lower rates.
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Key Takeaways
- Funding fees are critical in perpetual contracts and vary by exchange.
- Rates depend on interest and premium components, influenced by market volatility.
- Manage leverage carefully to mitigate funding-related risks.
Pro Tip: Avoid emotional trading and over-leveraging. Set stop-losses and take-profits to safeguard your portfolio.