How are funding rates determined in perpetual trading?
Funding rates are calculated periodically to align perpetual contract prices with underlying spot market prices. If the perpetual price exceeds the spot price, long positions pay short positions, and vice versa. Rates depend on market supply and demand, interest rates, and platform policies. Proper calculation prevents price divergence and manipulative trading. Funding payments occur automatically via smart contracts or exchange systems. Traders must monitor these rates as they directly impact cost of holding positions. Accurate funding rate design ensures price alignment, platform fairness, and risk management for both traders and the exchange.
Click to Know More: https://www.inoru.com/crypto-perpetual-exchange-development
Howdy, Stranger!