Position Change Fee

Position Change Fee vs Funding Fee

We do not charge you Funding fees like other exchanges.

However, for the purpose of risk control, we use a new mechanism of Position Change Fees (PCF).

The traditional Funding Fees are charged every 8 hours for every position held by traders, however, it has clear drawbacks: the risk exposure during the charge period is unhedged, any position holders face a constant and unpredictable risk of Funding Fee loss.

The PCF is only charged once - when a position is opened. We reward position changes that decrease the systemic risk (e.g. naked positions), and discourage position changes that increase systemic risk. When traders increase the systemic risks of a certain derivative, they will pay extra PCF to the system, and vice versa.

Calculation and Effect

The existence of PCF will encourage arbitrageurs to earn risk-free profit as follows: open a position under Derify protocol that is opposite to the naked position, then open a hedged position in an external market.

Such arbitrage activities will decrease the risk of the market, and decreases the risk exposure of the system.