Funding Fees
ZMO funding fees are settled every 8 hours, keeping perpetual futures prices aligned with the index. Fees are charged to the profitable side and credited to the losing side.
LL
Lulu Liu
8 min
ZMO implemented the Funding Fee mechanism to facilitate market fairness and keep the perpetual futures market price close to the average market price (index price based on different sources).
When there is a difference between ZMO's perpetual futures market price and the index price, the system will charge funding fees on those who profited due to the market price deviation at every 8-hour settlement interval, then credit the funding fees to those who lost money due to the market price deviation.
For example:
When the latest market price is much lower than the index price (which benefits the shorts), short position holders will be charged for the funding fees, and long position holders will receive the funding fees. On the contrary, if the market price is much higher than the index price, the longs will be charged fees, and the shorts will receive them.
Funding Fees, Settlement Time, and Frequency
Funding fees are settled every 8 hours. The minimum funding rate is +/- 0.1 bps (0.001%).
Funding Fees Settlement Conditions
Funding fees will only be charged/paid when both of the following conditions are met:
The funding rate is not equal to 0%
The status of your position must be Open when the system settles funding fees
Funding Fees Calculation
Funding Fee = Notional Value x Funding Rate
Funding Rates will be updated every minute. When settling the fee, the system will use the average results in the past 1 hour to calculate the fee.
Minimum funding rate for long positions: 0.001%
Minimum funding rate for short positions: -0.001%
Notional Value = Mark Price x Position Size x Contract Multiplier
Funding Rate = [Max (0, Impact Bid-Perp Index) - Max (0, Perp Index-Impact Ask)] / Perp Index / 24
When the funding rate is positive, Longs pay Shorts; when the funding rate is negative, Shorts pay Longs
Impact Bid Price: The average buy price of the first 10,000 highest bid orders in the Order Book
Impact Ask Price: The average sell price of the first 10,000 lowest ask orders in the Order Book
For example:
BTC Perpetual
- Index Price: 1230 USDT
- Mark Price: 1250 USDT
- Impact Bid: 1299 USDT
- Impact Ask: 1300 USDT
- Position Size: 1000 contracts
- Contract Multiplier: 0.001
Notional Value = 1250 x 1000 x 0.001 = 1250
Funding Rate = [Max (0, 1299-1230) - Max (0, 1230-1300)] / 1230 / 24 = (69-0) / 1230 / 24 = 0.002337
Funding Fee = 1250 * 0.002337 = 2.92125 USDT (Long pays to Short)
