Recently, I’ve seen many traders discuss the issue of funding rates, especially the setting of settling every hour. Honestly, at first I was a bit confused—what’s the point of such frequent fee settlements?

Thinking it through, there’s actually some reasoning behind this mechanism. First, high-frequency funding rate settlements can better reflect the real-time supply and demand in the market. Perpetual contracts essentially allow longs and shorts to balance prices through funding fees— the party paying the higher rate has to pay the other side, which automatically drives the price back toward the spot price. If the settlement cycle is too long, prices may deviate significantly, increasing the risk of liquidation.

Second, short settlement cycles also help with liquidity management. Exchanges can more flexibly adjust the fee rates to prevent extreme leverage situations during certain periods. For traders, it also means they don’t have to worry about being hit with a large fee all at once—distributing settlements makes costs easier to predict and manage.

Of course, there are also commercial considerations for the exchanges, but honestly, a reasonable mechanism benefits everyone. What’s your take on this? Do you think the fee settlement is too frequent, or do you have other ideas?