Binance Futures Fees Explained: 3 Types of Fees (Trading, Funding and Insurance Clearance)
3 min read · · Korean original
When trading futures on Binance, there are three main types of fees you may incur. Fees make up a big part of your trading profit and loss, so it's important to understand them well before you start trading in earnest.
In this post, we'll walk through the structure and calculation of trading fees, funding fees and insurance clearance fees as simply and thoroughly as possible. If you trade Binance futures or are getting ready to, be sure to read this post to the end.
- The three fees you may incur when trading futures on Binance are trading fees, funding fees and insurance clearance fees.
- Fee rates vary depending on how you trade (maker or taker), the contract type (USDⓈ-M or COIN-M) and your VIP level.
- Funding fees are not paid to the exchange; they are exchanged between long and short position holders.
- The insurance clearance fee is an additional cost charged when a user's position is forcibly liquidated.
1. Futures Trading Fees
Futures trading fees are charged every time an order is filled. They are charged differently for makers and takers. The base fees for Binance Futures are 0.02% for makers and 0.04% for takers, so makers, who use limit orders, pay half as much as takers.
- Makers provide liquidity to the market, so they usually get the benefit of lower fees.
- Takers remove liquidity, so they are charged higher fees.
Trading fees also depend on your account's VIP level. The higher your VIP level, the lower the fees you pay. To raise your VIP level, you need to reach a certain trading volume and hold BNB in your account.
Want to save on trading fees? On the Binance exchange, you can get a 10% fee discount by paying your futures trading fees with BNB. For more details, check out the BNB fee discount page.
Finally, it's important to understand that futures trading fees are applied in proportion to the notional value of the contract. For example, if you use 10x leverage with $1,000 of margin, you can open a $10,000 position. In this case, the fee is charged on the final position value of $10,000, in proportion to the leverage.
2. Funding Fees
Funding fees are payments exchanged periodically between long and short position holders. They come from a mechanism designed to keep the price of perpetual futures contracts close to the spot price.
When the funding rate is positive, longs pay the funding fee to shorts; when it is negative, shorts pay the funding fee to longs. In this process, Binance only facilitates the funding fee and does not take any profit from it.
| Funding rate | Long position | Short position |
|---|---|---|
| > 0 (positive) | Pays | Receives |
| < 0 (negative) | Receives | Pays |
Funding is usually settled every 8 hours, at 00:00, 08:00 and 16:00 UTC. Converted to Korea time (UTC+9), that's 09:00, 17:00 and 01:00 respectively.
3. Insurance Clearance Fee
The insurance clearance fee is an additional fee charged when a user's position is forcibly liquidated. Liquidation happens automatically when your account's margin balance falls below the maintenance margin.
When a liquidation occurs, roughly 1.25–2% of the position's notional value is charged as the insurance clearance fee. This fee goes into the Binance Insurance Fund.
The insurance fund is used to cover users' balances when they go negative due to sudden market moves. In addition, when the insurance fund is sufficiently large, auto-deleveraging (ADL), where trading positions are forcibly reduced, happens less often.
In short, the insurance clearance fee is an additional fee charged on liquidation. It is added to the Binance exchange's insurance fund and is later used to support more stable trading for users.
Wrapping Up
That covers the various fees you may incur when trading futures on Binance. The main ones are trading fees, funding fees and insurance clearance fees, and it's important to understand exactly how they work before you start trading futures.
