Funding Fee
Last updated: 01/12/2026
1. What Is the Funding Fee?
The funding fee is a core mechanism in the perpetual futures market designed to limit the deviation between the perpetual contract price and the corresponding spot index price. When perpetual contract trades at a significant premium or discount relative to the spot market, the funding mechanism facilitates periodic cash transfers between long and short position holders, guiding the contract price back toward the spot index price.
Please note that the funding fee is not charged by the platform. Instead, it is a transfer of funds between long and short position holders. KuCoin only acts as the matching and settlement platform and does not participate in or profit from the funding fee.
2. Funding Fee Settlement Mechanism
2.1 Settlement Frequency and Time
Currently, the funding fee settlement cycle for major trading pairs is once every 8 hours, while most other trading pairs are settled once every 4 hours.
When significant premiums or discounts occur (for example, when the funding rate reaches the upper or lower limit of a trading pair), the system may temporarily adjust the settlement cycle to once every 1 hour based on actual market conditions, in order to accelerate price convergence. Once the market returns to normal, the settlement cycle will revert to 4 hours (please refer to page displays and official announcements).
The actual funding fee settlement time may be dynamically adjusted according to market conditions. Please refer to the real-time display on the trading page for the most accurate information.
2.2 Who Pays or Receives the Funding Fee
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Only users who hold open positions at the funding fee settlement time are required to pay or receive funding fees.
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If all positions are closed before settlement time, no funding fee will be charged or received.
2.3 Direction of Funding Fee Payment
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When the funding rate is positive: Long positions → pay funding fees for short positions
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When the funding rate is negative: Short positions → pay funding fees for long positions
2.4 Funding Fee Collection and Payment
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The platform will fully collect or distribute the funding fee. After a funding fee is charged, users may be subject to position reduction or liquidation if margin requirements are not met.
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Isolated Margin Mode: Funding fees are deducted from or credited to the isolated position margin.
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Cross Margin Mode: Funding fees are deducted from or credited to the available balance of the futures account.
3. How the Funding Rate Is Calculated
Funding Rate = Clamp(MA [{(Best Bid Price + Best Ask Price) / 2 − Index Price} / Index Price + Interest Rate], Funding rate cap, Funding rate floor)
Where:
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Best bid price / best ask price: The best available buy and sell prices from the order book
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Index price: A weighted price derived from multiple major spot markets
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Funding rate upper/lower limits: Please refer to the relevant page for details
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Interest rate = 0.03% / (24 / Settlement interval)
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U-Margined contracts daily interest rate: 0.03%
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Coin-Margined contracts daily interest rate: 0.03%
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Moving Average (MA) calculation method: The MA is calculated using a sliding window based on the current time. It looks back over the premium index data covering the corresponding settlement cycle length, and all valid data points within the window are included in the calculation. Premium index data is sampled once per minute.
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Assume a contract has an 8-hour funding fee settlement cycle. If the current time is 14:59, the MA used for funding rate calculation will be based on the premium index data sampled every minute from 07:00 to 14:59, totaling 480 data points (n = 480).
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4. How the Funding Fee Is Calculated
4.1 Basic Formula
Funding Fee = Position Value × Funding Rate
The position value is calculated based on the mark price at the funding fee settlement time.
4.2 Position Value by Contract Type
(1) U-Margined Perpetual Contracts
Position Value = Position Size × Mark Price
Example: A user holds a 0.01 BTC long position in a BTC perpetual contract.
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Mark price at settlement: 5,000 USDT
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Funding rate: 0.01%
Calculation:
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Position value = 0.01 × 5,000 = 50 USDT
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Funding fee = 50 × 0.01% = 0.005 USDT
If the funding rate is positive, the long position pays 0.005 USDT for the short position, which receives the same amount.
(2) Coin-Margined Contracts
Example: A user holds 10,000 USD of a BTCUSD perpetual contract (long position).
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Mark price at settlement: 50,000 USDT
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Funding rate: 0.025%
Calculation:
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Position value = 10,000 ÷ 50,000 = 2 BTC
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Funding fee = 2 × 0.025% = 0.0005 BTC
If the funding rate is positive, the long position pays 0.0005 BTC, and the short position receives the same amount.
5. Purpose and Impact of Funding Fees
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Maintain price anchoring: Funding fees facilitate interest transfers between long and short positions to keep the contract price close to the spot price.
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Stabilize market structure: Settlement frequency may be increased during extreme premiums or discounts to accelerate price normalization.
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Controlled risk exposure: Funding rates are subject to system-defined upper and lower limits, preventing excessive costs for users during extreme market conditions.
6. Viewing Funding Rates
Users can view the current funding rate and the countdown to the next settlement directly on the futures trading page.
Historical funding rates can be accessed via the Funding History page.
KuCoin Futures Guide:
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KuCoin Futures Team
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