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:

$$Funding Payment =\sum (Funding Rate *PositionSize)$$

The Funding Rate can be calculated as follows:

$$Funding Rate =TurnoverFactor*(\frac{(f -o)}{(o)}+Clamp(-\frac{(f -o)}{(o)},-2.5\%,2.5\%)))*\frac{\delta time}{86400}$$

In the equation above:

• $f$ is the 15-minute TWAP of Futures Price and $o$ is the Oracle Price (see Oracle page)
• $TurnoverFactor$ adjusts funding rate based on the turnover velocity of the NFT market and is set at 0.1
• The clamp function takes into consideration of the bid-ask spread observed from data collected over major NFT marketplaces. If the gap between the Oracle Price and Futures Price is within 2.5%, funding payment will be 0%

• 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

*Tribe3 team will continuously monitor the market condition, such as liquidity condition of the market, and make adjustment to the parameters of the funding payment equation from time to time