Funding Rate

The funding rate is a payment made between long and short traders in a perpetual market. Funding rates can be positive or negative.

• Positive Funding Rate: If the perpetual contract price is higher than the Mark Price (indicating more longs), long positions will pay a fee to short positions.

• Negative Funding Rate: If the perpetual contract price is lower than the Mark Price (indicating more shorts), short positions will pay a fee to long positions.

Funding fees are automatically made between longs and shorts, hence AstherEx does not charge any fees for transfers. Funding rates on AstherEx consider interest rates and premium, whereby:

• Interest Rates: Interest rates of the currencies involved in the trading pair.

• Premium: The premium ensures the perpetual contract price converges with the underlying asset's spot price. During periods of high volatility, the perpetual contract price may deviate significantly from the mark price. In such cases, the premium index kicks in to enforce convergence between the futures market price and the spot price.

Interest Rate

AstherEx uses a fixed daily interest rate (0.03%) within the funding rate, assuming holding cash offers a higher return than holding the equivalent in BTC. This rate can adjust based on market factors like the Federal Funds Rate.

Calculating Premium Index

The premium index is calculated individually for each contract using the following formula:

• Premium Index (P) = max(0, Impact Bid Price - Price Index) - max(0, Price Index - Impact Ask Price) / Price Index

whereby:

• Impact Bid Price: Average price to execute a specific notional value (Impact Margin Notional) using the bid price.

• Impact Ask Price: Average price to execute the Impact Margin Notional using the ask price.

• Price Index: A weighted average price based on a basket of prices from major spot exchanges with volume as the weighting factor.

Funding Amount Calculation

The funding amount is calculated by multiplying the notional value of your position by the funding rate.

• Notional value: Multiply mark price by the number of contracts you hold.

Funding rates may affect perpetual contract prices. For example, if the current Last Traded price for a contract on AstherEx is significantly higher as compared to the Mark Price, there are more traders with long positions and funding rate is likely to be positive. To avoid paying funding fees, long traders may close their positions. This may lead to the Last Price dropping to approximate the Mark Price.

Calculating the Impact Bid/Ask Price

Impact Margin Notional (IMN): The notional value tradable with a specific margin amount (e.g. 200 USDT) at maximum leverage. It's calculated as: IMN = Margin Amount / Initial Margin Rate (at max leverage)

Aggregated Impact Margin Notional: If insufficient orders exist within the market, AstherEx uses the aggregated impact margin notional, calculated by aggregating order books from multiple platforms. The formula remains the same, but the IMN considers the combined order books.

Assume that the bid-side of the order book is:

If the cumulative commission amount quoted at Level x is greater than the IMN: Contract multiplier × ∑px × qx > IMN, and if the cumulative commission quoted at Level x-1 is less than the IMN: Contract multiplier × ∑px-1 × qx-1 < IMN, then the Impact Bid Price at Level x is included in the calculation.

Formula:

Impact Bid Price = IMN / (IMN — Contract Multiplier × ∑px-1 × qx-1) / px + Contract Multiplier × ∑qx-1)