Funding

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Overview

Funding payments anchor perpetual contract prices to spot. They are exchanged hourly, directly between long and short holders. The exchange does not take a cut. If the perp trades at a premium to spot, longs pay shorts. If at a discount, shorts pay longs.

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Funding Rate Formula

Each funding period, the rate is computed from sampled premiums: $$F = \text{clamp}\left(P_\mu + \text{clamp}(r - P_\mu, -d, d), -f_{\text{cap}}, f_{\text{cap}}\right)$$ Where:

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Premium Sampling

Each sample interval (configurable, typically every few seconds):

1. Compute the depth-weighted bid and ask prices by sweeping a fixed notional amount through the book:
   • P_bid = sweep(sell, size)
   • P_ask = sweep(buy, size)
   • where size = notional / mid
2. Get the oracle price P_o
3. Compute the premium:

$$\Delta D = \max(P_{\text{bid}} - P_o, 0) - \max(P_o - P_{\text{ask}}, 0)$$ $$\Pi = \frac{\Delta D}{P_o}$$

4. P_mu = SMA(Pi) over the configured window

This depth-weighted premium is more robust than a simple mid-price comparison because it accounts for actual executable prices at meaningful size.

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Funding Payment

For each position at funding time: $$\text{payment} = \text{notional}_{\text{USD}} \times F \times (-\text{sign}(Q))$$

• Long (Q > 0) with positive F: pays funding (payment deducted from margin)
• Short (Q < 0) with positive F: receives funding (payment added to margin)
• Signs reverse when F is negative

Payments are applied directly to your margin balance. No separate funding wallet.

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Schedule

Funding is calculated and settled every hour, aligned to the top of the hour. The rate is applied to positions open at the funding timestamp.