When the funding rate is positive, long position holders pay funding to the short position holders; when the funding rate is negative, short position holders pay funding to the long position holders. The funding rate is expressed as an 8-hour interest rate, and is calculated at any given time as follows:
Deribit does not charge any fees on funding. All the funding payments are transferred between the holders of the perpetual contracts. This makes the funding a zero-sum game, where longs receive all funding from shorts, or shorts receive all funding from longs.
Sequentially, the funding rate is derived from the premium rate by applying a damper.
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If the premium rate is within -0.025% and 0.025% range, the actual funding rate will be reduced to 0.00%.
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If the premium rate is lower than -0.025%, then the actual funding rate will be the premium rate + 0.025%.
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If the premium rate is higher than 0.025%, then the actual funding rate will be the premium rate - 0.025%.
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Additionally, the funding rate is capped, the value depends on the specific instrument.
The funding rate can be calculated as:
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Funding Rate = Maximum (0.025%, Premium Rate) + Minimum (-0.025%, Premium Rate)
The impact of the funding cap can be calculated as:
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Minimum (Maximum_Cap, Maximum (Minimum_Cap, Funding_Rate))
The funding rate with taking the cap into account can be calculated as:
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Minimum (Maximum_Cap, Maximum (Minimum_Cap, (Maximum (0.025%, Premium Rate) + Minimum (-0.025%, Premium Rate))))
Time Fraction = Funding Rate Time Period / 8 hours
The actual funding payment is calculated by multiplying the funding rate by the position size and the time fraction.
Funding Payment = Funding Rate * Position Size * Time Fraction
In reality the spread of the Deribit Index and the mark price changes continuously, and all changes are taken into account. Therefore, the examples below are extreme simplifications of the actual calculations. The funding paid or received is continuously added to the realized sessions PNL (RSPL) and is moved to or from the cash balance at the daily settlement, at 08:00 UTC.
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BTC |
ETH |
USDC & USDT |
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Funding damper |
Minimum -0.025% and maximum 0.025% |
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Funding cap |
Minimum -0.5% and maximum 0.5% |
Minimum -1.0% and maximum 1.0% |
Minimum -5.0% and maximum 5.0% |
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Example 1 |
If the BTC-PERPETUAL mark price is at USD 100,075 and the Deribit index is at USD 100,000, the funding rate and premium rate are calculated as follows: Premium Rate = ((100,075 - 100,000) / 100,000) * 100% = 0.075% Funding Rate = Maximum (0.025%, 0.075%) + Minimum (-0.025%, 0.075%) = 0.075% - 0.025% = 0.05% Let's assume a trader has a long position of USD 100,000 (1 BTC) for 1 minute, and during this minute the mark price remains at USD 100,075 and the Deribit index remains at USD 100,000, in this case, the funding calculation for this period is: 8 hours = 480 minutes: Funding Rate = 1/480 * 0.05% = 0.0001041667% Funding Payment = 0.0001041667% * 1 BTC = 0.000001041667 BTC The short position holders receive this amount and the long position holders pay it. |
If the ETH-PERPETUAL mark price is at USD 5,005 and the Deribit index is at USD 5,000, the funding rate and premium rate are calculated as follows: Premium Rate = ((5,005 - 5,000 / 5,000) * 100% = 0.10% Funding Rate = Maximum (0.025%, 0.10%) + Minimum (-0.025%, 0.10%) = 0.10% - 0.025% = 0.075% Let's assume a trader has a long position of USD 5,000 (1 ETH) for 1 minute, and during this minute the mark price remains at USD 5,005 and the Deribit index remains at USD 5,000, in this case, the funding calculation for this period is: 8 hours = 480 minutes: Funding Rate = 1/480 * 0.075% = 0.00015625% Funding Payment = 0.00015625% * 1 ETH = 0.0000015625 ETH The short position holders receive this amount and the long position holders pay it. |
If the BTC_USDC-PERPETUAL mark price is at USDC 100,075 and the Deribit index is at USDC 10,000, the funding rate and premium rate are calculated as follows: Premium Rate = ((100,075 - 100,000) / 100,000) * 100% = 0.075% Funding Rate = Maximum (0.025%, 0.075%) + Minimum (-0.025%, 0.075%) = 0.075% - 0.025% = 0.05% Let's assume a trader has a long position of USDC 100,000 for 1 minute, and during this minute the mark price remains at USD 100,075 and the Deribit index remains at USD 100,000, in this case, the funding calculation for this period is: 8 hours = 480 minutes: Funding Rate = 1/480 * 0.05% = 0.0001041667% Funding Payment = 0.0001041667% * 100,000 = 0.1041667 USDC The short position holders receive this amount and the long position holders pay it. |
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Example 2 |
If a trader chose to hold the position of the previous example for 8 hours and the mark price and Deribit index remained at USD 100,075 and USD 100,000 for the entire period, then the funding rate would be 0.05%. The funding payment would be paid by the longs and received by the shorts. For 8 hours, it would have been 0.0005 BTC. |
If a trader chose to hold the position of the previous example for 8 hours and the mark price and Deribit index remained at USD 5,005 and USD 5,000 for the entire period, then the funding rate would be 0.075%. The funding payment would be paid by the longs and received by the shorts. For 8 hours, it would have been 0.00075 ETH. |
If a trader chose to hold the position of the previous example for 8 hours and the mark price and Deribit index remained at USD 100,075 and USDC 100,000 for the entire period, then the funding rate would be 0.05%. The funding payment would be paid by the longs and received by the shorts. For 8 hours, it would have been 50.00 USDC. |
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Example 3 |
If the mark price is USD 100,075 for 1 minute and then changes to USD 99,925 the minute after that, however, the Index remains at USD 100,000, then the net funding in these 2 minutes for a 1 BTC long position is exactly 0 BTC. After the first minute, the trader would pay: 1/480 * 0.05% = 0.0001041667% * 1 BTC = 0.000001041667 BTC, however, the minute after, the trader would receive exactly the same amount. |
If the mark price is USD 5,005 for 1 minute and then changes to USD 4,995 the minute after that, however, the Index remains at USD 10,000, then the net funding in these 2 minutes for a 1 BTC long position is exactly 0 BTC. After the first minute, the trader would pay: 1/480 * 0.075% = 0.00015625% * 1 ETH = 0.0000015625 ETH, however, the minute after, the trader would receive exactly the same amount. |
If the mark price is USDC 100,075 for 1 minute and then changes to USD 99,925 the minute after that, however, the Index remains at USDC 100,000, then the net funding in these 2 minutes for a 100,000 USDC long position is exactly 0 USDC. After the first minute, the trader would pay: 1/480 * 0.05% * Position Size = 0.0001041667% * 10,000 = 0.1041667 USDC, however, the minute after, the trader would receive exactly the same amount. |
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Example 4 |
The mark price is USD 100,020, and the Index remains at USD 100,000. In this case, real-time funding is zero (0.00%) because the mark price is within the +/-0.025% range from the index price(within USD 99,975 and USD 100,025). This can be checked by using the premium rate and funding rate formulas: Premium Rate = ((100,020 - 100,000) / 100,000) * 100% = 0.02% Funding Rate = Maximum (0.025%, Premium Rate) + Minimum (-0.025%, Premium Rate) = 0.025% - 0.025% = 0.00% |
The mark price is USD 5,001, and the Index remains at USD 5,000. In this case, real-time funding is zero (0.00%) because the mark price is within the +/-0.025% range from the index price(within USD 4,998.75 and USD 5,001.25). This can be checked by using the premium rate and funding rate formulas: Premium Rate = ((5,001 - 5,000) / 5,000) * 100% = 0.02% Funding Rate = Maximum (0.025%, Premium Rate) + Minimum (-0.025%, Premium Rate) = 0.025% - 0.025% = 0.00% |
The mark price is USDC 100,020, and the Index remains at USDC 100,000. In this case, real-time funding is zero (0.00%) because the mark price is within the +/-0.025% range from the index price(within USDC 99,975 and USDC 100,025). This can be checked by using the premium rate and funding rate formulas: Premium Rate = ((100,020 - 100,000) / 100,000) * 100% = 0.02% Funding Rate = Maximum (0.025%, Premium Rate) + Minimum (-0.025%, Premium Rate) = 0.025% - 0.025% = 0.00% |
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Example 5 |
To explain the funding cap we need to take an extreme example If the markprice is at USD 107,500 and the index price is at 100,000, the funding rate and premium rate are calculated as follows: Premium Rate = ((107,500 - 100,000) / 100,000) * 100% = 7.5% Funding Rate = Maximum (0.025%, 7.5%) + Minimum (-0.025%, 7.5%) = 7.5% - 0.025% = 7.475% Funding Rate Cap included = Minimum (0.5%, Maximum (-0.5%, (Maximum (0.025%, 7.5%) + Minimum (-0.025%, 7.5%)))) = 0.5% This exceeds the maximum funding cap of 0.5% and the funding is capped at 0.5% |
To explain the funding cap we need to take an extreme example If the markprice is at USD 5,100 and the index price is at 5,000 the funding rate and premium rate are calculated as follows: Premium Rate = ((5,100 - 5,000 / 5,000) * 100% = 2.0% Funding Rate = Maximum (0.025%, 2.0%) + Minimum (-0.025%, 2.0%) = 2.0% - 0.025% = 1.975% Funding Rate Cap included = Minimum (1.0%, Maximum (-1.0%, (Maximum (0.025%, 7.5%) + Minimum (-0.025%, 7.5%)))) = 1.0% This exceeds the maximum funding cap of 1.0% and funding is capped at 1.0% |
To explain the funding cap we need to take an extreme example If the markprice is at USDC 107,500 and the index price is at 100,000, the funding rate and premium rate are calculated as follows: Premium Rate = ((107,500 - 100,000) / 100,000) * 100% = 7.5% Funding Rate = Maximum (0.025%, 7.5%) + Minimum (-0.025%, 7.5%) = 7.5% - 0.025% = 7.475% Funding Rate Cap included = Minimum (5.0%, Maximum (-5.0%, (Maximum (0.025%, 7.5%) + Minimum (-0.025%, 7.5%)))) = 5.0% This exceeds the maximum funding cap of 5.0% and the funding is capped at 5.0% |