What are the differences in perpetual contract funding fees on different exchanges?

Exchanges implement funding fees to maintain market equilibrium, with variations in fee size and frequency across platforms; Kucoin boasts the lowest funding fees among those mentioned.

Nov 21, 2024 at 11:52 am

What are the Differences in Perpetual Contract Funding Fees on Different Exchanges?

Perpetual contracts are a type of futures contract that does not have a fixed expiration date. This means that traders can hold onto their positions for as long as they want, without having to worry about rolling them over into a new contract.

Funding fees are a mechanism used by exchanges to ensure that the perpetual contract market bleibt balanced. When the market is balanced, the price of the perpetual contract will be very close to the spot price of the underlying asset.

If the market is not balanced, the funding fee will be adjusted to incentivize traders to take positions that will bring the market back into balance.

How do funding fees work?

When the perpetual contract price is above the spot price, the funding fee is positive. This means that traders who are long the perpetual contract (i.e., holding onto a buy position) will pay a fee to traders who are short the perpetual contract (i.e., holding onto a sell position).

When the perpetual contract price is below the spot price, the funding fee is negative. This means that traders who are short the perpetual contract will pay a fee to traders who are long the perpetual contract.

The size of the funding fee is determined by the exchange and can vary depending on the market conditions.

What are the differences in perpetual contract funding fees on different exchanges?

The perpetual contract funding fees on different exchanges differ in two main ways: the size of the fee and the frequency with which it is applied.

1. The Size of the Fee
Binance: The funding fee on Binance is 0.01% of the contract value every 8 hours.
Bybit: The funding fee on Bybit is 0.01% of the contract value every 8 hours.
OKX: The funding fee on OKX is 0.02% of the contract value every 8 hours.
Kucoin: The funding fee on Kucoin is 0.005% of the contract value every 8 hours.
Huobi: The funding fee on Huobi is 0.02% of the contract value every 8 hours.

2. The Frequency

The funding fee frequency on different exchanges can vary from every 8 hours to once a day. The more frequent the funding fee, the more likely it is to keep the market balanced.

Which exchange has the lowest perpetual contract funding fees?

Kucoin has the lowest perpetual contract funding fees of all the exchanges listed above. However, it is important to note that the funding fee is a good indicator of the liquidity of the perpetual contract market.

The perpetual contract market with a high funding fee will likely be the most liquid and have the smallest spreads.