Our dated futures are designed to track the price of the underlying asset — like Bitcoin — as closely as possible. The funding rate is the mechanism that makes this happen.
Because our contracts have a five-year maturity rather than expiring in days or weeks, the contract price does not naturally converge toward the spot price the way a short-dated future would. Instead, the funding rate continuously nudges the contract price back into alignment with spot by creating a financial incentive for traders to take balancing positions.
How it works
Every four hours, a funding payment is exchanged between traders holding long positions and traders holding short positions — depending on whether the contract price is trading above or below the spot price.
What determines the funding rate?
The funding rate is calculated based on the difference between the contract price and the spot price over a four-hour averaging window. Averaging over a period — rather than reacting to every price tick — smooths out short-term volatility and keeps the funding rate predictable.
Minor deviations between the contract price and spot do not trigger funding payments unless they exceed a predefined threshold. This prevents unnecessary adjustments from small, temporary price movements.
The funding rate also operates within a capped range, meaning it cannot exceed a maximum value. This keeps funding costs predictable and prevents extreme market conditions from generating outsized charges.
What does this mean for you as a trader?
- Cost of holding positions — if the funding rate is consistently positive or negative, holding a position for an extended period will incur funding costs. Factor this into your strategy, especially for longer-held positions.
- Market sentiment signal — a strongly positive funding rate generally reflects bullish market sentiment; a negative rate suggests bearish sentiment. Some traders use this as an additional indicator.
- It applies automatically — funding payments are calculated and applied to your account every four hours without any action required on your part.
At One Trading, our funding rate mechanism is designed to be transparent, fair, and predictable — keeping trading costs clear and consistent for all clients.
Investing involves risks. The value of investments can go up as well as down and you may receive back less than your original investment or lose your entire investment. Investing with leverage means the value of your investment fluctuates more than the price of the underlying asset. One Trading does not provide investment advice and investors should make their own decisions or seek independent advice.