PrimeBit uses the Funding Rate (FR) to adjust the price of your perpetual contract to the reference price. We calculate the FR on the basis of Interest Rate (I) and Premium/Discount index (P).
When trading BTCUSD on PrimeBit Bitcoin is a base currency, while the US Dollar is quote currency.
Interest Rate = (The Interest Rate for borrowing the Quote currency - The Interest Rate for borrowing the Base currency) / Funding Interval
Current interest rates are quoted on BTC.bon, ETH.bon, LTC.bon and USD.bon symbols.
The Funding Interval equals three (since funding occurs every 8 hours during the day).
Any perpetual contract on PrimeBit can be traded at a Premium or Discount to the Fair Price. We use Premium/Discount Index to adjust the upcoming FR to the right level.
Premium/Discount Index = (Max(0, Effective Bid Price - Fair Price) - Max(0, Fair Price - Effective Ask Price)) / Spot Price
Premium/Discount rates are quoted on BTCUSD.premium, ETHUSD.premium and LTCUSD.premium symbols.
We calculate the (P) and (I) every minute for each pair tradable on PrimeBit.
The Funding Rate is calculated with the 8-Hour Interest Rate Component and the 8-Hour Premium or Discount. A +/-0.05% dampener is added.
Funding Rate (FR) = Premium Index (P) + clamp(Interest Rate (I) - Premium Index (P), 0.05%, -0.05%)
If (I - P) is within +/-0.05% then F = P + (I - P) = I. In other words, the Funding Rate will equal the Interest Rate.
The absolute Funding Rate is capped at 0.1875% to ensure that maximum leverage can be utilized.