This article focuses on the definition of funding costs, funding rates, components of funding rates, calculation and other related issues.
Definition of funding fee
The funding fee is the main mechanism by which MEME ensures that the latest market price remains anchored to the global spot price, somewhat similar to the SWAP on a position held in a spot margin trade.
How the funding fee is paid or collected
What is the funding fee rate
Funding Fee = Position Value * Funding Fee Rate.
1.Interest rate: The base currency and the denominated currency are included.
2.Premium index = ( Max ( 0 , depth-weighted bid price - marker price) - Max ( 0 , marker price - depth-weighted ask price)) / spot price + reasonable base rate of marker price
Calculation of the funding rate
The funding rate is calculated based on the interest rate and the premium/discount component of the funding rate interval for each contract, with a buffer zone of +/- 0.025% set by MEME.
*The funding fee is charged by the long and short sides to each other, the MEME platform does not receive funding fees.