Funding Payment
What is Funding Payment?
Funding payment incentivizes users to execute trades that bring the Futures Price closer to the Oracle Price. Funding payment works as follows:
Oracle Price > Futures Price | Oracle Price < Futures Price | |
---|---|---|
Payment arrangement | Short positions pay long positions | Long positions pay short positions |
Encourage users to open | Long positions | Short positions |
Desired price change direction | Up | Down |
When does Funding Payment Happen?
Traders receive or pay funding payment continuously.
Formula
Funding payment is calculated as follows:
The Funding Rate can be calculated as follows:
where is the 15-minute TWAP of Futures Price and is the Oracle Price (see Oracle page). Since funding payment, as mentioned above, is paid / received continuously, so the funding rate is adjusted based on the amount of time that the funding rate has lasted.
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