Is the Funding Rate Applied to the Full Notional Value of the Position or Only the Margin?
The funding rate is applied to the full notional value of the position, not just the margin. The notional value is the total value of the contract being controlled, which is the position size multiplied by the contract price.
This ensures that the incentive to align the contract price with the spot price is proportional to the size of the exposure.
Glossar
Funding Rate
Cost ⎊ The Funding Rate is the periodic payment exchanged between long and short positions in perpetual futures contracts, designed to anchor the contract price to the underlying spot index price.
Notional Value
Scale ⎊ Notional Value refers to the total market value of the underlying asset controlled by a derivatives position, calculated by multiplying the contract size by the current market price, irrespective of the actual margin capital posted.
Full Notional Value
Value ⎊ Full notional value represents the total value of the underlying asset controlled by a derivatives contract.