Session End Time
Every 1 hour (24 sessions per day at 00:00, 01:00, 02:00 … 23:00 UTC) daily is when settlement occurs, this is known as the Session End Time.
Funding Payments
Funding Payments are calculated at the Session End Time to encourage the alignment of prices traded on the Exchange to the underlying index price.
Funding Calculations
Funding Payment (USD) = Funding Rate * Position Size (USD)
Funding Rate = 1-hour TWAP of 1 minute Premium Rate (from the previous funding interval) / 24
Premium Rate = ((Mark Price - Index) / Index) * 100%
The settlement involves the following 3 steps:
Funding settlement: When the Funding Rate is positive, long position holders pay funding to the short position holders; when the Funding Rate is negative, short position holders pay funding to the long position holders. The Funding Rate displayed on the Trading Page screen is the TWAP of 1-minute Premium Rate from the start of the current session.
Rollover open positions: All open positions at the end of the trading session will be rolled over to the new session. The Average Price will be reset to the Mark Price as of the end of that session, and the Unrealized PnL will be realised. The Realised PnL, together with any Unrealised PnL occurred during the trading session, will be withdrawable after settlement.
Uncovered loss settlement: If there is uncovered loss recorded during the trading session or after position roll over, the mechanisms in relation to the Insurance Fund and Socialised Loss Mechanism will be triggered. Under the Socialised Loss Mechanism, loss shared among the winners will be deducted from the Realized PnL immediately.
Using the formula to calculate the Funding Payment, an example is shown below:
Funding Payment (USD) = Funding Rate x Position Size (USD)
Let’s assume at the time of settlement:
Initial Wallet Balance is 10,000 USD
Funding Rate is 0.0340%
No open order
| Before Settlement | After Settlement |
Trader A | Before settlement time, the trader has already closed all positions and has realised a profit of 1,000 USD.
Wallet Balance: 11,000 USD Withdrawable Balance: 10,000 USD | Trader’s withdrawable balance now includes the profits of 1,000 USD. No funding PnL as there is no open position.
Wallet Balance: 11,000 USD Withdrawable Balance: 11,000 USD |
Trader B | The trader has an open short position of 10,000 USD
In the 8 hour session, the trader has not yet closed the position, and has Unrealized PnL of -250 USD
Wallet Balance: 10,000 USD Withdrawable Balance: 10,000 + -250 USD - Initial Margin required for the open position | Funding Payment = 0.0340% * 10,000 = 3.4
Wallet Balance is now at 9,753.4 USD
Trader’s Average Price of the position is reset to the Mark Price.
Wallet Balance: 9,753.4 USD Withdrawable Balance: 9,753.4 USD - Initial Margin required for the open position |
Trader C | The trader has an open long position of 15,000 USD
In the 8 hour session before settlement time, the trader has not yet closed the position, and has Unrealized PnL of 250 USD
Wallet Balance: 10,000 USD Withdrawable Balance: 10,000 USD - Initial Margin required for the open position | Funding Payment = 0.0340% * -15,000 = -5.1
Wallet Balance is now at 10,244.9 USD
Trader’s Average Price of the position is reset to the Mark Price
Wallet Balance: 10244.9 USD Withdrawable Balance: 10244.9 USD - Initial Margin required for the open position |
If market circumstances require so, funding and settlement may be delayed at Crypto.com’s discretion.