Funding

Funding rate calculation and settlement

Unlike futures contracts, perpetuals have no expiry date. Funding is the mechanism that keeps the perpetual price anchored to the underlying’s fair value. When the perpetual trades above Index, longs pay shorts. When it trades below Index, shorts pay longs.

Funding runs continuously across all sessions, regardless of whether the underlying reference market is open. This keeps the convergence incentive active and prevents positions from being left unanchored from fair value.

How Funding Works

Funding is computed in three stages:

1. A premium index is sampled from the order book every 5 seconds.
2. Samples are averaged over the 1-hour charge window to produce an hourly rate.
3. The rate is settled against every open position at the end of the window.

Premium Index

Every 5 seconds, the protocol takes one snapshot per market of how far the book has drifted from Index. It walks the book for a fixed quote notional on each side.

bid_impact = VWAP of top bids filling 1,000 quote notional
ask_impact = VWAP of top asks filling 1,000 quote notional

If one side of the book cannot fill the notional because it is too thin or empty, that side falls back to Index, which zeros its contribution.

The impact price difference and premium index are:

IPD = max(bid_impact - Index, 0) - max(Index - ask_impact, 0)
PremiumIndex = IPD / Index

A positive premium means the perpetual is trading rich versus Index. A negative premium means it is trading cheap.

Funding Rate

At the end of each charge window, premium samples are averaged, passed through the 8-hour funding formula, divided by 8 to get an hourly rate, and capped.

mean_P = average of PremiumIndex samples over the window
scale = 1.0 for crypto markets; 0.5 otherwise
F_8h = scale * (mean_P + clamp(0.0001 - mean_P, +/-0.0005))
FR_hour = clamp(F_8h / 8, +/-0.04)

• The 0.01% term is a fixed interest leg per 8 hours.
• The +/-0.05% clamp bounds the interest-versus-premium adjustment.
• Crypto markets use a 1.0 scale.
• Non-crypto markets use a 0.5 scale.
• The 4% per hour cap prevents extreme funding during sustained dislocation.

Payment

At the end of each charge window, every open position in the market settles a funding payment proportional to position size and the hourly rate.

Condition	Longs	Shorts
Hourly rate > 0, perp rich vs Index	Pay	Receive
Hourly rate < 0, perp cheap vs Index	Receive	Pay

Funding is a direct transfer between longs and shorts. The protocol takes no cut. Settlement credits or debits the quote balance, and realized funding is tracked separately from trading PnL.

Interval

The charge window is 1 hour. Samples are averaged over the hour, and the hourly rate is applied once at the end.

Between settlements, rolling premium samples and implied rates are published so traders can see funding pressure build in real time.

Parameters

Parameter	Default	Description
Sample interval	5 seconds	Cadence of premium index samples
Impact notional	1,000 quote notional	Quote notional used for impact VWAP
Interest leg	0.01% per 8 hours	Fixed component in the 8-hour formula
Interest clamp	+/-0.05%	Symmetric clamp on interest minus premium
Funding scale	1.0 crypto; 0.5 otherwise	Multiplier applied to the 8-hour formula
Charge window	1 hour	Interval between funding settlements
Funding rate cap	4% per hour	Maximum absolute hourly funding rate