Does the Funding Rate Calculation Use a Simple Average or a More Complex Metric?

The funding rate calculation typically uses a complex metric that involves two main components: the interest rate component and the premium/discount component. The premium/discount component, which reflects the basis, is usually the dominant factor.

The interest rate component is often a fixed, small rate set by the exchange. The final rate is a function of the time-weighted average of the premium over the funding interval.