OKX, a prominent player in the cryptocurrency exchange arena, has unveiled substantial modifications to its funding fee mechanism for perpetual futures. The aim of this overhaul is to enrich the user experience and streamline the efficiency of funding fee settlements.

Revisions to Order Cancellation Protocol

The revamped mechanism involves a phased approach to adjusting the order cancellation logic during settlement. Despite the calculation logic for funding rates remaining static, the procedures for the collection and distribution of funding fees will experience significant enhancements.

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Collection of Funding Fees

Under the previous system, OKX collected funding fees up to the liquidation threshold, canceling orders when necessary. The revised model, however, mandates the collection of the entire outstanding funding fee, even if it surpasses the liquidation threshold. If needed, this will result in partial or complete liquidation.

In the isolated margin mode, funding fees will now be exclusively collected from the margin balance of isolated positions, with no order cancellations during the collection process. Should the margin balance prove insufficient, liquidation will ensue as necessary.

For cross margin modes (single-currency, multi-currency, and portfolio margin), funding fees will be drawn from cross margin equity without canceling orders. If equity is inadequate, it will trigger partial or complete liquidation.

Distribution of Funding Fees

The process for distributing funding fees is also set to change. Previously, the distributed amount was proportional to the position value of users due to receive funding fees. Moving forward, OKX will distribute the entire amount during settlement.

For isolated margin positions, the funding fee will augment the margin balance of the position. In cross margin modes, the fee will be added to cross margin equity.

Phased Rollout

This new mechanism will be implemented in four distinct phases:

1. First Phase: Commencing on June 12, 2024, at 6:00 am UTC, it will impact five perpetual futures, including LINK-USD, LINK-USDT, LUNA-USDT, LUNC-USDT, and SHIB-USDT.
2. Second Phase: Starting June 17, 2024, at 6:00 am UTC, it will encompass 32 perpetual futures, such as ALPHA-USDT, SUI-USDT, SWEAT-USDT, and FIL-USD.
3. Third Phase: Launching on June 24, 2024, at 6:00 am UTC, covering 103 perpetual futures, including AAVE-USDT, CETUS-USDT, GAL-USDT, and MAGIC-USDT.
4. Fourth Phase: Beginning on July 1, 2024, at 6:00 am UTC, it will affect 87 perpetual futures, such as 1INCH-USDT, BLOCK-USDT, FET-USDT, and LTC-USDT.

Post-July 1, 2024, all perpetual futures, including any not listed above or newly listed, will adhere to the new funding rate mechanism.

By implementing these changes, OKX aims to optimize the settlement process and ensure a more equitable and efficient trading environment for its users.