Good, decisive cryptocurrency information can be hard to find, but you can find it all on one platform, Kucoin. Kucoin offers users information about 500+ cryptocurrencies such as ETH, USTC, and KCS. Kucoin also provides its users with information regarding the market, such as funding rates, staking, interest rates, giveaways, and more. Kucoin boasts the best security in the crypto trading world with its sophisticated security system handled by a team of professional security personnel. So without further ado, let us delve in-depth about the funding rates of cryptocurrencies on Kucoin.
Firstly, What Is Funding?
The last price at which a cryptocurrency is traded is considered the “Last Price.” Last prices can deviate massively from spot trading if not regulated. Kucoin uses a funding method to control this deviation, ensuring that last prices are close to global spot prices. Last price calls, which are called fundings, are made every 8 hours at 04:00, 12:00, and 20:00 UTC. A formula is used to calculate the funding. If the funding is positive, longs pay shorts; This means users that did not close positions before the funding call will have to pay funding fees to those that did close positions. If the funding is negative, the shorts pay longs, meaning those that closed positions need to pay the funding fees to those that did not close positions.
How Is Funding Calculated?
Funding calculation is simple
Funding = Funding Rate x Position Value
The position value is the value of the holding lots divided marked price at the funding call.
The funding rate is composed of different elements and is more complicated to calculate.
What Is Funding Rate Composed Of?
The funding rate is composed of two things: Interest rate and Premium Index.
Interest rate | Interest rate is dependent on two things: quote currency’s interest rate minus base currency’s interest rate divided by funding interval.
Premium Index | Premium index holds power to increase or decrease funding rates equally. It is calculated using a complex formula: Maximum(impact bid price – mark price) – maximum(mark price – impact bid price) divided by spot index, all of this plus funding basis.
Funding Basis | Funding basis is the funding rate multiplied by the ratio of time until funding and funding interval
For more details, users should visit Kucoins Contract specifications.
Finally, let us calculate the funding rate now.
How To Calculate Funding Rate Using All This?
You can calculate the funding rate using the sum of the premium index and clamp multiplied by the interest rate – premium index.
premium index + Clamp(interest rate – premium index) gives you the funding rate.
In conclusion, funding rate and funding calls are easy to calculate; you can do it using the Kucoins platform, where they specify it all on their contract. Kucoin is a great crypto trading platform for everyone as it offers easy-to-understand instructions and the best security compared to other platforms using its sophisticated security system.