Binance resumes 4-hour funding rate settlement for five USDT contracts

Binance Futures has resumed a shorter funding rate settlement cycle for five Tether-based perpetual contracts, effective from July 22. The change marks a shift in how frequently traders will be charged or receive payments depending on their long or short positions. Previously settled every eight hours, these contracts will now reset every four hours, with caps on how much traders can earn or owe based on market conditions. The update reflects Binance’s ongoing adjustment model aimed at keeping its derivatives offerings aligned with spot market dynamics and evolving liquidity conditions. Binance alters settlement frequency for five contracts On July 22 at 12:00 UTC, Binance reinstated a four-hour funding rate settlement interval for five USDT-margined perpetual contracts—XTZUSDT, BROCCOLIF3BUSDT, MYXUSDT, MUSDT, and ERAUSDT. These contracts, all quoted in Tether (USDT), will now be subject to a revised payment structure aimed at maintaining price alignment between futures and spot markets. The four-hour frequency means funding payments—fees exchanged between long and short traders to reflect market sentiment—will occur six times daily instead of three. Four of the contracts—BROCCOLIF3BUSDT, MYXUSDT, MUSDT, and ERAUSDT—have a capped maximum rate of +2.00% and -2.00%. Meanwhile, XTZUSDT will operate under a lower cap of +0.75% and -0.75%. The change is part of Binance’s broader funding rate settlement frequency update policy. According to Binance’s official notice , settlement intervals can be shortened to as little as one hour if funding rates approach their maximum caps, allowing Binance Futures to mitigate risks arising from excessive market imbalances. Funding rate changes tied to market conditions Funding rates are critical to perpetual contracts, which, unlike traditional futures, do not have an expiry date. These rates incentivise traders to keep contract prices tethered closely to the underlying spot price. When a perpetual contract trades above spot, long traders pay short traders. When the reverse is true, the payment direction flips. By adjusting the settlement frequency and maximum caps, Binance aims to respond quickly to market demand and volatility. If funding rates consistently approach the upper or lower limits, Binance may increase the settlement frequency to hourly in order to reduce sudden position shifts and reinforce pricing stability. Binance Futures periodically reviews its contracts to determine whether funding rate caps or settlement intervals need revision. This flexible approach enables the platform to maintain competitive alignment with other exchanges while managing liquidity depth and trader behaviour more effectively. XTZUSDT given unique funding cap Among the five updated contracts, XTZUSDT stands out with a tighter funding cap of ±0.75%. This narrower range suggests comparatively lower volatility or trading volume in the Tezos-USDT pair, requiring a more conservative mechanism to prevent over-exposure to directional bias. The other four tokens—BROCCOLIF3BUSDT, MYXUSDT, MUSDT, and ERAUSDT—are granted a wider range of ±2.00%. This indicates these contracts are either newer or more volatile, necessitating greater funding elasticity to balance open interest between longs and shorts. These changes coincide with Binance Futures’ ongoing efforts to refine trading mechanics and monitor the correlation between futures and spot prices, particularly during periods of high leverage or rapid price movements. Binance holds dominant position in Bitcoin liquidity The update comes as Binance maintains a significant lead in the broader derivatives and spot crypto markets. According to recent data, Binance accounted for roughly 32% of all Bitcoin trading liquidity across exchanges, including deep order book strength across varying price depths. This dominance highlights the importance of funding rate mechanisms and regular contract reviews, especially given the exchange’s volume exposure. As market participants increasingly use perpetual futures to speculate or hedge, Binance’s rate settlement model serves as a key tool to maintain price stability and reduce arbitrage discrepancies. With funding rate caps now actively managed and settlement intervals adjustable in real-time, Binance continues to assert control over its derivatives infrastructure while responding to real-time market signals. The post Binance resumes 4-hour funding rate settlement for five USDT contracts appeared first on Invezz

Source: Invezz