Binance Funding Rate is the fee charged by Binance for providing leverage to traders. This fee is charged every 8 hours and is based on the following formula:
Funding Rate = [(Interest Paid – Interest Charged) / (Leverage * Notional Value)] * 100%
The Interest Paid is the interest that accrues on the trader’s account over the 8-hour period. The Interest Charged is the amount of interest that Binance charges for providing leverage.
The Leverage is the amount of leverage that the trader has chosen. The Notional Value is the value of the trade. .
NOTE: WARNING: The Binance funding rate is subject to change and may not be the same as the rate published. Therefore, it is important to understand the current rate before trading in order to avoid any unexpected losses. Additionally, please be aware of any changes in market conditions that may affect the Binance funding rate.
For example, let’s say a trader has a 1 BTC position with 5x leverage. The current BTC price is $10,000. The interest paid over 8 hours would be 0.0001 BTC. The interest charged would be 0.00002 BTC.
The funding rate would be ((0.0001-0.00002)/(5*1))*100% = 0.4%.
The funding rate is positive when the interest paid is greater than the interest charged, and vice versa. When the funding rate is positive, traders who are long will pay traders who are short.
When the funding rate is negative, traders who are short will pay traders who are long.
Binance Funding Rate is calculated every 8 hours and is based on the following formula: .
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