Important: Funding Rate Calculation Update for XRPUSDC, SUIUSDC, SOLUSD, PENGUUSDT, NMRUSDT, and ZRCUSDT (2025-11-27)
Dear KuCoin Users,
To further enhance the stability, fairness, and accuracy of the funding rate mechanism in reflecting real market supply and demand, KuCoin Futures will upgrade the funding rate calculation algorithm for selected perpetual contracts.
1. Contract Scope & Schedule
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Upgrade Time: 08:00 on November 27, 2025 (UTC)
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Affected Contracts:
| Contract Pair | Max Leverage | Funding Interval | Depth Weight Unit (USD) |
| XRPUSDCM | 75× | 8 hours | 100 |
| SUIUSDCM | 50× | 8 hours | 100 |
| SOLUSDM | 50× | 8 hours | 100 |
| PENGUUSDTM | 75× | 4 hours | 100 |
| NMRUSDTM | 30× | 4 hours | 100 |
| ZRCUSDTM | 12× | 4 hours | 100 |
The upgraded algorithm will be applied starting from the 08:00 (UTC) funding settlement and all subsequent funding times.
2. Details of the Funding Rate Algorithm Upgrade
Previous Algorithm (Current)
Funding Rate = Clamp( MA( (Best Bid + Best Ask) / 2 − Index Price ) / Index Price + Interest Rate , Upper Limit , Lower Limit )
Key characteristics:
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Uses simple bid/ask midpoint to compute premium
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Uses moving average (MA) for smoothing
New Algorithm (Upgraded Version)
Funding Rate = clamp[ Average Premium Index + clamp(Interest Rate − Average Premium Index, 0.05%, −0.05%), Upper Limit, Lower Limit ]
Enhancements include introducing Depth-Weighted Prices, Average Premium Index, and a Rate Adjustment Term.
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Premium index upgraded to “Depth-Weighted Bid/Ask Price”
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Replaces simple best bid/ask prices
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Reflects more realistic executable market prices
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Depth-weighted notional = depth unit × max leverage
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Depth unit typically 100 or 200 (per contract configuration)
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Introduction of the “Average Premium Index” (time-weighted)
- The premium index over the previous funding interval is time-weighted on a per-minute basis. More recent data receives higher weights, effectively reducing abnormal funding rates caused by short-term price spikes.
- Average Premium Index: The average premium index is calculated using a time-weighted average, where each minute’s premium index within the previous funding interval is weighted according to its recency.
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- Example: The average premium index at time Tₙ is calculated as(1 × Premium₁ + 2 × Premium₂ + … + n × Premiumₙ) / (1 + 2 + … + n).For instance, if a contract settles funding every 8 hours, then at 14:59, the calculation will use the premium index from 07:00 to 14:59, totaling 480 minutes, applying the time-weighted average described above.
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Introduces “Interest Rate Adjustment Term”
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Prevents excessive deviation between interest rate and premium
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U-margined interest rate: 0.03% per day
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Coin-margined interest rate: 0.03% per day
3. Core Parameter Definitions
(1) Interest Rate Calculation
Interest Rate = 0.03% / (24 / funding interval hours) Example: 8-hour interval ⇒ interest rate = 0.01%
(2) Premium Index Calculation
Premium Index =[max(0, Depth-Weighted Bid − Index Price) − max(0, Index Price − Depth-Weighted Ask)] / Index Price
Depth-Weighted Price Example
Assume:
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Depth Weight Unit = 200
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Max Leverage = 100
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Depth-weighted notional = 200 × 100 = 20,000 USDT
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Bid Level
|
Price
|
Quantity (BTC)
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Total（USDT）
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Depth-Weighted Executed Quantity (BTC)
|
|---|---|---|---|---|
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1
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90,000
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0.02
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1,800
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0.02
|
|
2
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89,900
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0.06
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7,194
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0.06
|
|
3
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89,700
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0.16
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21,546
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20,000-7,194 =12,806 USDT
12,806/89,700 = 0.14276 BTC
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Depth-Weighted Bid = 20,000 USDT /（0.02+0.06+0.14276）BTC=89,780.8 USDT
(3) Average Premium Index (time-weighted)
(1 × Premium₁ + 2 × Premium₂ + … + n × Premiumₙ) / (1 + 2 + … + n)
(4) Funding Rate Caps
Used to maintain reasonable funding levels during extreme market conditions.
KuCoin may adjust caps temporarily based on real-time volatility.
4. Potential Impacts
As the new algorithm reflects depth, liquidity, and supply/demand more accurately:
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Funding rate levels may differ from the previous algorithm
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Significant impact on funding arbitrage and cross-exchange hedging
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Large positions or high-frequency strategies should re-evaluate risk exposure
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We recommend monitoring the affected pairs after the upgrade
Suggested actions:
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Reduce leverage appropriately to avoid exposure to short-term volatility
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Update the “Funding Rate Prediction Module” in arbitrage/hedging models
KuCoin Futures will continue to optimize its contract trading mechanisms to provide users with a safer and more efficient trading experience.
Thanks for your understanding and support!
The KuCoin Futures Team
Risk Warning: Futures trading is a high-risk activity with the potential for huge gains and huge losses. Previous gains do not indicate future returns. Severe price fluctuations may result in the forced liquidation of your entire margin balance. This information should not be regarded as investment advice from KuCoin. All trading is done at your own discretion and your own risk. KuCoin is not liable for any losses resulting from Futures trading.
Thank you for your support!
The KuCoin Team
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