A Perpetual Contract is a derivative product that is similar to a traditional futures contract. Unlike a traditional futures contract, however, there is no expiry or settlement date. The MEXC perpetual contract uses a special funding cost mechanism to ensure that the contract price tracks the underlying price closely.
The Market Mechanism of Swap
When trading perpetual contracts, a trader needs to be aware of several things:
- Position Marking: Perpetual Contracts adopt fair price marking. The fair price determines unrealized Profits and Losses (PnL) and liquidation prices.
- Initial and maintenance margin: These margin levels determine the trader’s leverage and the point at which forced liquidation occurs.
- Funding: This refers to periodic payments exchanged between the buyer and seller every 8 hours to ensure the contract price tracks underlying prices closely. If there are more buyers than sellers, the longs will pay the funding rate to the shorts. This relationship is reversed if there are more sellers than buyers. You will only be entitled to receive or obliged to pay the funding rate if you hold a position at specific Funding Timestamps.
- Funding Timestamps: 04:00 SGT, 12:00 SGT and 20:00 SGT.
Note: You will only be entitled to receive or obliged to pay the funding rate if you have an open contract position at specific Funding Timestamps.
Traders can learn the current funding rate for a contract on the “Trade” tab under “Funding Rate”.
The Funding Costs is the core operating mechanism of the MEXC Futures
The Funding Timestamps are as follows : 04:00 (UTC), 12:00 (UTC), 20:00 (UTC)
The value of your position is independent of your leverage multiplier. For example: if you hold 100 BTC/USDT contracts, you will receive or pay for funds based on the value of these contracts instead of how much margin you have allocated to this position.
Funding Cost Limits
MEXC caps the funding cost on its perpetual swaps to allow traders to maximise their leverage. This has been done in two ways.
The absolute upper limit of the funding cost is 75% of the (initial margin rate- maintenance margin rate).
For example, if the initial margin rate is 1%, the maintenance margin rate is 0.5%, then the max. funding cost is 75% * (1%-0.5%) = 0.375%.
The relationship between MEXC perpetual contracts and funding cost
MEXC does not take a cut of the funding rate. The funding rate is exchanged directly between traders in the long position and traders in the short position.
The MEXC transaction fees are as follows:
Maker fee Taker fee
Note: If the contract fee is negative, a payment will be made to the trader instead. .
Wallet balance = Deposit amount - Withdrawal amount + Realized PnL
Realized PnL = Total PnL of closed positions - Total fees - Total funding cost
Total Equity = Wallet balance + Unrealized PnL
Position Margin = Funding for position, generally including all the user's positions (cross or isolated) - Please note that the position margin of MEXC Futures only includes the traders’ isolated margin and the initial margin of the cross position, excluding the floating margin under cross positions.
The margin of open orders = all frozen funds of open orders
Available = Wallet balance - Margin of isolated position - Initial margin of cross margin positions - Frozen assets of open orders
Net asset balance = Funds available for asset transfers and the opening of new positions
Unrealized PnL = sum of all floating profits and losses