Binance is set to resume its funding rate settlement model for five USDT-based perpetual contracts. The funding rates will be applied every four hours starting on July 22.
According to a recent notice, the minimum and maximum funding rates for several perpetual contracts will resume in accordance with the exchange’s current adjustment process applied to funding rate settlement frequency.
The affected perpetual contracts are all USDT (USDT)-based, which include XTZUSDT, BROCCOLIF3BUSDT, MYXUSDT, MUSDT, and ERAUSDT.
Starting from July 22 at 12:00 UTC, the financing rate for the aforementioned perpetual contracts will be applied by the exchange every four hours. Four of the contracts, BROCCOLIF3BUSDT, MYXUSDT, MUSDT, and ERAUSDT, have a maximum financing rate capped at +2.00% and -2.00%.
However, there is one perpetual contract on the list that has been given a max funding rate of +0.75% and -0.75%, which is XTZUSDT.
The adjustment is part of Binance’s new funding rate settlement frequency update, in which the exchange will update adjustments to perpetual contracts on Binance Futures periodically depending on market conditions.
If the contract’s funding rate settlement of USDT-based perpetual contracts reaches the maximum funding rate cap, then Binance Futures will adjust the settlement frequency from every eight hours or every four hours to every one hour.
Funding rates serves as a mechanism to balance out long and short positions and prevent deviations between the futures and spot markets. They are payments made in intervals between traders to maintain the contract price close to the spot price of the underlying asset.
Binance Futures conducts regular reviews of its perpetual contracts to determine whether the maximum financing rate should be adjusted or if the periodic intervals would be changed, depending on the market conditions.
Most recently, Binance reportedly held the largest portion of Bitcoin trading compared to all other crypto exchanges. As previously reported by crypto.news, the exchange controlled around 32% of all Bitcoin liquidity on exchanges, with deeper liquidity across all trading depths.
Source link