> ## Documentation Index
> Fetch the complete documentation index at: https://dexbuilder.mintlify.site/llms.txt
> Use this file to discover all available pages before exploring further.

# Funding Rate

## What is the funding rate?

Funding is a periodic payment exchanged between long and short position holders. Its purpose is to help perpetual contract prices remain aligned with the underlying reference market.

* Positive funding: longs pay shorts.
* Negative funding: shorts pay longs.
* Funding payments are exchanged between traders rather than collected as a trading fee by the platform.

Funding intervals can vary by contract, such as 8-hour or 4-hour cycles.

## Funding-rate calculation

A simplified representation is:

```text theme={null}
Premium Index =
[Max(0, Impact Bid - Index Price) - Max(0, Index Price - Impact Ask)] / Index Price
```

```text theme={null}
Funding Rate =
Average Premium Index + clamp(Interest Interval - Current Premium Index, 0.05%, -0.05%)
```

The final funding rate is bounded by the configured maximum funding range for the market.

## Impact prices

Impact bid and ask prices are calculated from the order book using a configured notional depth. They represent the average executable price needed to trade the target notional amount.


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