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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:
Text
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:
FundingPayment=(FundingRatePositionSize)Funding Payment =\sum (Funding Rate *PositionSize)
The Funding Rate can be calculated as follows:
FundingRate=(fo)(o)δtime86400Funding Rate =\frac{(f -o)}{(o)}*\frac{\delta time}{86400}
where
ff
is the 15-minute TWAP of Futures Price and
oo
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.