KuCoin is present among the world’s top 5 crypto currency exchanges. Expert traders and investors join the KuCoin platform because of its advanced features. The team behind the KuCoin makes it the most successful crypto trading platform in the world. The different types of trading offered by KuCoin provide more transparency and option to traders. The funding rate is a similar feature used in future trading. This will help you to trade your assets with more control over leverage. You also can position your asset in a long or short. In this article, we explain funding rates by KuCoin.
Funding In Future Trading
This technique stops the deviation of the last price from the spot. The funding mechanism ensures that the last price is always anchored to the global spot price. Funding occurs every 8 hours a day. Traders only pay or receive funding in case of holding a position. You will lose your funding if you close your position. Funding is calculated by multiplying the position value with the funding rate.
Funding Rate Calculations
The funding rate comprises the interest and premium index. First, we have to calculate them.
Interest Rate
Each contract on KuCoin’s future trading is based on the base currency and the quote currency. The interest rate is the difference between these two currencies and indicates an interest rate between them. Here the interest is equal to a difference of both currencies divided by the funding interval. The interest rate of these currencies is comprised of 8 hours intervals. Traders can check the interest rate and other similar data on the index page.
Premium Index
The perpetual contract can be traded for less or premium market price. The premium index will increase or decrease the next funding rate in this situation. The premium index can be calculated below the formula.
Premium Index=Max(Impact bid price−Mark price,0)−Max(Mark price−Impact bid priceask,0)/ spot index +Funding Basis
Where,
Funding basis= Funding Rate (Time Until Funding/Funding Interval)
Traders can check the details related to the premium index on the index page and contract specifications page.
Funding Rate
The 8 hours premium index and index rate can calculate the initial funding rate. Now the final funding rate can be calculated using an initial funding rate. Initial and maintenance margin will apply at the funding timestamp.
Conclusion
KuCoin has a large influence among the different crypto traders present in the market. There is lots of advancement and newly innovative features present on KuCoin. These all play a major role in attracting new traders to it. KuCoin develops its platform with many robust and beginner-friendly features. You can also find a BTC price and all other live market data on KuCoin since Bitcoin is the biggest coin in the whole crypto world. That’s why more and more people take an interest in it. This post discussed a funding rate as an important asset for future trading. We discussed each factor in more detail and tried to explain it easily.
