Fees incurred by Perpetual Swap Contracts

There are three types of fees you will encounter when participating in contract trading, namely:

1. Commission fee (Incurred whenever an order is executed)

2. Funding fee (Incurred only when holding a position at the time of settlement)

3. Liquidation fee

I. Commission Fee

·Trigger conditions: When all or part of your position is traded, a handling fee will be charged

·Commission fee rate: Maker-0.02%  Taker-0.06%

What are Makers and Takers

1.Makers-orders

It means that a trader places a certain number and price of orders, but there is no matching order in the market. Then this order will be placed on the exchange's market, waiting for other users to trade with it. It is equivalent to providing liquidity for the entire market, so it is called "orders"

2.Takers-orders

It means that traders actively place a certain number of orders by checking the existing order prices in the exchange's market depth table, and immediately trade with the existing orders.

If the order quantity of the taker is greater than the order quantity of the maker, if the trader places a limit order and does not cancel the order, it will become a new order as a maker and continue to wait for trading. At this time, the taker will become the maker

3. Commission fee Calculation Formula:

Commission fee=Entry price  X  Contract Value  X  Position Size  X  Rate of Maker/Taker

II. Funding Rate

1. Funding Rate Mechanism

The role of the funding rate is to narrow the price difference (price reversion) between the perpetual contract market and the spot market.

Unlike traditional contracts, perpetual contract traders can hold positions forever, without a delivery date, and do not need to track different delivery months. For example, traders can hold airdrop positions permanently until they are closed. Therefore, perpetual contract trading is very similar to trading spot market trading pairs. In short, perpetual contracts are not liquidated in the traditional way. For this reason, crypto asset platforms have created a mechanism to ensure that the contract price matches the index price. This mechanism is called the funding rate.

Web

APP

2. Funding Rate

funding fee = nominal value of position   x   funding rate

*Nominal value of position = mark price   x   position size  x contract value

3.How to calculate the funding rate?

The calculation of funding rate consists of two parts: interest rate and premium. The premium represents why the price of the perpetual contract will converge with the change trend of the underlying price.

Coinstore uses a fixed interest rate in the fund rate. By default, the interest rate is set at 0.03% per day (0.01% per fund rate settlement cycle).

Calculation formula of fund rate:

Step 1: calculate the impact buy / sell price:

The cumulative order amount near the orderbook reaches the average price of all orders with margin impact.

*The margin impact amount refers to the maximum amount of margin that can be traded in a certain amount. For example, for BTCUSDT contract, the margin impact refers to the amount of margin that can be traded for 1000USDT. Margin impact = 1000usdt * maximum leverage

If the cumulative order amount of quotation in depth X is greater than the amount of margin impact, and the cumulative order amount of quotation in depth X-1 is less than the amount of margin impact, the cumulative order amount of quotation in depth x is used in the calculation, so that the cumulative order amount of quotation is > = the amount of margin impact

Calculation formula:

Suppose the depth purchase price is calculated to x depth, and the price and quantity are PX and QX.

Similarly, we can calculate the impact sell price. 

Step 2: calculate the forecast premium index

Coinstore calculates the premium index every minute, and calculates all indexes as arithmetic average during the funding period.

Note: 480 time points are sampled in each period. When the server is down or maintained, the sampling may be less than 480 time points.

Forecast premium index (t) = max (impact buy price, min (mark price, impact sell price)) / index price-1

Step 3: calculate the forecast average premium index

The forecast premium index obtained in the second step is brought into the weighted average formula to calculate the forecast average premium index of a certain minute.

Step 4: calculate the forecast funding rate

The one minute forecast funding rate is calculated based on the interest rate and the forecast average premium.

Forecast fund rate (T) = forecast average premium index (T) + clamp [interest rate - forecast average premium index (T), - 0.05%, 0.05]

*Clamp is an interval limited function. When the target value exceeds the upper and lower limits, only the boundary value will be taken.

If (interest rate forecast average premium index (T)) is within + / - 0.05%, the funding rate will be equal to the interest rate.

For example, when the average premium index is between - 0.04% and 0.06%, the temporary fund rate will be equal to 0.01% (interest rate)

At the same time, the forecast fund rate is limited by the upper and lower limits of the range

Forecast fund rate (T) = clamp [forecast fund rate (T), upper limit, lower limit]

*Upper limit = 0.75 * maintenance margin ratio, lower limit = - 0.75 * maintenance margin ratio

Step 5: funding rate

The funding rate of the next period (8:00-15:59) will be determined at the last minute of each period (7:59)（ This fixed value is used to calculate the swap fee at 16:00 and the mark price during the period.)

The funding rate is calculated according to the maintenance margin ratio and initial margin ratio of each contract. The maintenance margin ratio and initial margin ratio of each contract are not exactly the same. Please pay attention to the contract configuration parameters for details.

III. Liquidation fee

When liquidation is executed, all current orders in the user's contract account will be cancelled immediately. At the same time, a "liquidation fee" will be charged and added to the insurance fund. Therefore, we strongly recommend that users close their positions before the margin drops to the maintenance margin level to avoid forced liquidation and incurring additional fees.