# Funding

## **Perpetual Contract Pricing Mechanism**

Perpetual contract prices are anchored to the spot index price via the funding fee mechanism.

* **Long positions** pay funding fees to **short positions** when contracts trade **at a premium** to the spot price.
* **Short positions** pay funding fees to **long positions** when contracts trade **at a discount** to the spot price.\
  \&#xNAN;*The platform retains none of these fees.*

## **Funding Rates**

Funding fees are charged hourly and determined by two components:

1. **Interest Rate (IR)**\
   Daily rate: 0.03% *(*Variable*)*.

   Hourly rate:

   $$\text{Hourly Interest Rate} = \frac{0.03%}{24}$$

2. **Premium Index (P)**\
   Calculated at randomized intervals within each minute for each market:

   $$\text{Premium Index} = \frac{\max(0,,B - I) - \max(0,,I - A)}{I}$$

* B: Impact bid price (average execution price to close a long via market sell)
* A: Impact ask price (average execution price to close a short via market buy)
* I: Spot index price
* **Impact Notional Value**:

  $$\text{Impact Notional Value} = \frac{800,\text{USDT}}{\text{Initial Margin Ratio}}$$

The hourly Premium Index is the average of all premium indices calculated within the hour.

## **Hourly Funding Fee Rate (FR)**

**IF** $$\left|\text{Premium Index} - \text{Hourly Interest Rate}\right| \leq 0.05%$$then:

$$
\text{Funding Fee Rate} = \text{Hourly Interest Rate}
$$

Otherwise:

$$
\text{Funding Fee Rate} = \text{Hourly Interest Rate} + \text{Premium Index}
$$

## **Funding Rate Cap**

The absolute value of the funding rate is bounded by:

$$
|FR| \leq 0.75%
$$


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