> For the complete documentation index, see [llms.txt](https://docs.extended.exchange/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.extended.exchange/extended-resources/trading/funding-payments.md). # Funding Payments For information only. Eligibility and jurisdictional restrictions apply. Trading involves risk of total loss. See the Terms, Risk Statement and Restricted Countries. Funding payments are recurring fees exchanged between counterparties of the perpetual contract (from long positions to short positions and vice versa), ensuring the perpetual's price remains aligned with the underlying spot price of the asset. In practice: * If the perpetual price exceeds the spot price, long positions pay funding fees to short positions. * If the perpetual price is lower than the spot price, short positions pay funding fees to long positions. The size of the funding payment is determined by the difference between the perpetual and spot prices, as well as the duration over which this difference is realized. At Extended, funding payments are charged every hour and are applied to all users with open positions at that time. If a user closes their position before the funding fee is charged, it is not applied. **Funding Payment = Position Size \* Mark Price \* (-Funding Rate)**, which implies that: * If the funding rate is positive, long positions pay to short positions. * If the funding rate is negative, short positions pay to long positions. The funding rate calculation depends on the market's execution model and asset class. ## Order Book Markets ### Crypto Markets **Funding Rate = (Average Premium + clamp(Interest Rate - Average Premium, 0.05%, -0.05%)) / 8**, which implies that: * While funding payments are applied hourly, the funding rate realization period is 8 hours. * The interest rate component is set at 0.01% per 8 hours for consistency with CEXs. It represents the difference between the cost of borrowing USD and the cost of borrowing the underlying crypto asset. * The size of the hourly Funding Rate is capped as per the table below. **Average Premium = (1\*Premium Index\_1 + ··· + N\*Premium Index\_N) / (1+···+N)**, where: * Premium Index is calculated every 5 seconds and therefore 'N' is equal to 720. * Premium Index = (Max(0, Impact Bid - Index Price) - Max(0, Index Price - Impact Ask)) / Index Price. * Impact Bid / Ask refers to the average fill price to execute the Impact Notional on the Bid / Ask side. * Impact Notional for different groups of markets is described below. **Funding Rate Caps and Impact Notional Values across groups of markets.** | Group\* | Rate Cap per hour | Impact Notional | | ------- | ----------------- | --------------- | | 1-2 | 0.25% | $10,000 | | 3 | 0.5% | $5,000 | | 4 | 0.75% | $5,000 | | 5 | 1% | $2,500 | | 6 | 2% | $2,500 | | 7 | 2% | $500 | *\*Refer to the section* [*Margin Schedule*](/extended-resources/trading/crypto-markets/margin-schedule.md#order-book-markets) *for grouping of markets.* ### RWA Markets Funding for order book RWA markets follows the same premium-based methodology as order book crypto markets above: **Funding Rate = (Average Premium + clamp(Interest Rate - Average Premium, 0.05%, -0.05%)) / 8** with one difference: * The Interest Rate component is set at 0.0035% per 8 hours (\~3.83% annualised) to better reflect the carry pricing of RWA instruments, bringing it closer to SOFR. **Funding Rate Caps and Impact Notional Values across groups of markets.** | Group\* | Rate Cap per hour | Impact Notional | | ----------------------------------------------------------------------------------------------------- | ----------------- | --------------- | | FX (EUR, USDJPY), Indices / ETFs (SPX, NDX, EWY), Precious Metals (XAU, XAG), Industrial Metals (XCU) | 1% | $5,000 | | Stocks (All), Energy (WTI, XBR, NATGAS), Precious Metals (XPT), Pre-IPOs (SPCX) | 1% | $2,500 | *\*Refer to the section* [*Margin Schedule*](/extended-resources/trading/rwa-markets/margin-schedule.md#order-book-markets) *for grouping of markets.* ## RFQ Markets ### Crypto Markets For markets that use Binance as the underlying price source, funding rates are sourced directly from Binance funding, rather than being calculated separately: * Premium Index is calculated every 5 seconds and therefore 'N' is equal to 720. * Premium Index = (Max(0, Impact Bid - Index Price) - Max(0, Index Price - Impact Ask)) / Index Price. * Impact Bid / Ask refers to the average fill price to execute the Impact Notional on Binance on the Bid / Ask side. **Average Premium = (1\*Premium Index\_1 + ··· + N\*Premium Index\_N) / (1+···+N)**, where: * While funding payments are applied hourly, the funding rate realization period is 8 hours. * The interest rate component is set at 0.01% per 8 hours for consistency with CEXs. It represents the difference between the cost of borrowing USD and the cost of borrowing the underlying crypto asset. ### RWA Markets For RWA that use Binance as the underlying price source, funding rates are sourced directly from Binance funding, the same way as for RFQ crypto markets. RWA markets that use Hyperliquid as the underlying price source follows the same premium-based methodology as order book crypto markets, with one difference: the Premium Index is computed from the Mark Price rather than from order book impact prices. **Premium Index = (Mark Price - Index Price) / Index Price** **Average Premium = (1\*Premium Index\_1 + ··· + N\*Premium Index\_N) / (1+···+N)**, where the Premium Index is calculated every 5 seconds over the past hour and therefore 'N' is equal to 720. **Funding Rate = clamp(Funding Scaling Factor \* (Average Premium + clamp(Interest Rate - Average Premium, 0.05%, -0.05%)) / 8, ±1% per hour)** * While funding payments are applied hourly, the funding rate realization period is 8 hours. * The Interest Rate component is set at 0.01% per 8 hours, consistent with order book crypto markets. * Scaling factor = 0.5. * The hourly funding rate is capped at 1% per hour. ### Prime RWA Markets Prime RWA markets use a single price feed (Index Price = Mark Price), so a premium-based funding rate would always equal zero. Funding for these markets is instead derived from the aggregate position imbalance (open interest skew) in each market: **Funding Rate = clamp(Average Retail OI / (OI Limit / 2), -1, +1) \* Max FR**, floored at the market's base rate: * If Average Retail OI > 0, Funding Rate = max(Funding Rate, +Floor). * If Average Retail OI < 0, Funding Rate = min(Funding Rate, -Floor). * If Average Retail OI = 0, Funding Rate = +Floor. **Average Retail OI = (1\*OI\_1 + ··· + N\*OI\_N) / (1+···+N)**, where: * OI is the signed retail open interest of the market: long open interest is positive, short open interest is negative. * OI is sampled every 5 seconds and therefore 'N' is equal to 720 (a linearly-weighted average over the past hour). In practice, the Floor acts as the base funding rate: the funding rate's magnitude never falls below the Floor, and its sign follows the position skew. The funding rate scales linearly with the open interest imbalance and reaches Max FR when the net imbalance reaches half of the market's OI Limit. **Funding Rate parameters for Prime RWA markets.** | Parameter | Value | | ----------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | | Floor (base rate) | 0.0005% per hour | | Max FR | 0.003% per hour (6 × Floor) | | OI Limit | Per market - equals the market's OI Cap, see the RFQ section of [RWA Trading Rules](/extended-resources/trading/rwa-markets/trading-rules.md#group-specific-trading-rules-1) |