Funding rates are determined by two factors: interest rates and the premium index of the asset.

Interest rates are fixed rates set by exchanges. In cryptocurrency perpetual contract trading, it is generally assumed that holding cash earns a higher interest rate than holding an equivalent amount of cryptocurrency. By default, the interest rate component of the funding rate is usually 0.03% per day. However, exchanges adjust the rates based on market conditions.

The premium index of the asset refers to the premium situation of the contract price relative to the underlying asset price. When there is a significant discrepancy between the contract price and the underlying asset price, exchanges adjust the funding rate to encourage convergence of the contract price and the underlying asset price. The premium index is determined by calculating the difference between the impact buy price and the impact sell price. These prices are calculated based on average prices on the order book, taking into account the price index.