Funding Rate Logic - DerivaDEX Docs

DerivaDEX funding is the periodic USDC transfer between longs and shorts that keeps a perpetual swap close to the index price.

Funding rate inputs and limits

The funding rate starts from the average premium rate across the funding window, then applies a dead zone and a hard clamp.

Parameter	Value	Notes
Funding input	Average premium rate across the funding window	Computed from the recorded price checkpoints for the market
Zero-band upper bound	`0.0005` (`5` bps)	Positive average premiums inside the band settle to zero funding
Zero-band lower bound	`-0.0005` (`-5` bps)	Negative average premiums inside the band settle to zero funding
Funding-rate upper bound	`0.005` (`50` bps)	Hard cap on one funding result
Funding-rate lower bound	`-0.005` (`-50` bps)	Hard floor on one funding result
Positive rate direction	Longs pay shorts	Debited and credited in USDC
Negative rate direction	Shorts pay longs	Debited and credited in USDC

Rate calculation

The dead zone removes the first 5 bps of premium on either side of zero. A premium inside that band produces zero funding.

average_premium_rate = average(premium_rate(checkpoint_1 ... checkpoint_n))

if -0.0005 <= average_premium_rate <= 0.0005:
  funding_rate = 0
else:
  funding_rate = clamp(average_premium_rate - sign(average_premium_rate) × 0.0005,
                       -0.005,
                       0.005)

Average premium rate	Funding result
`0.0003`	`0`
`0.0009`	`0.0004`
`-0.0012`	`-0.0007`
`0.0090`	`0.0050`
`-0.0200`	`-0.0050`

Funding payment

Funding is paid against the current mark price (the fair-risk price used for margin and liquidation) for each open position.

long_payment  = -funding_rate × position_size × mark_price
short_payment =  funding_rate × position_size × mark_price

Position	Funding rate	Result
Long	Positive	USDC debit
Short	Positive	USDC credit
Long	Negative	USDC credit
Short	Negative	USDC debit

Funding payments are itemized by symbol, then applied to the strategy’s USDC collateral balance. If the payment pushes a strategy underwater, liquidation can follow in the same settlement cycle.

Worked payment cases

These examples show one funding event for one open position.

Position	Mark price	Funding rate	Payment
Long `2` ETHP	`2,000`	`0.0004`	`-1.6` USDC (`-0.0004 × 2 × 2,000`)
Short `2` ETHP	`2,000`	`0.0004`	`+1.6` USDC (`0.0004 × 2 × 2,000`)
Long `1.5` ETHP	`2,000`	`-0.0007`	`+2.1` USDC (`0.0007 × 1.5 × 2,000`)
Short `1.5` ETHP	`2,000`	`-0.0007`	`-2.1` USDC (`-0.0007 × 1.5 × 2,000`)

When funding is applied

Funding applies at settlement boundaries rather than on every fill.

Parameter	Value	Notes
Funding cadence	Every `8` hours	The public baseline runs funding once per settlement epoch
Applied to	Open perpetual positions	Closed positions do not pay or receive funding
Balance updated	Strategy collateral	Funding is a `STRATEGY_UPDATE` with reason `FundingPayment`
Price input for payment	Mark price	See Price Feeds and Mark Price Inputs
Relationship to PnL settlement	Separate action	Funding is distinct from periodic PnL realization even when both happen in the same settlement cycle

These parameters are governance-controlled and may change through DAO proposals.

​Funding rate inputs and limits

​Rate calculation

​Funding payment

​Worked payment cases

​When funding is applied

​Related references

Funding rate inputs and limits

Rate calculation

Funding payment

Worked payment cases

When funding is applied

Related references