> For the complete documentation index, see [llms.txt](https://agentdex.gitbook.io/agentdex-docs/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://agentdex.gitbook.io/agentdex-docs/trading/funding.md).

# Funding

Funding payments keep the perpetual contract price anchored to spot in the absence of an expiry. At each funding interval, longs and shorts exchange a small payment proportional to position size and to the **funding rate**. The exchange is peer-to-peer; AgentDex doesn't take a cut of funding (it's not a fee — see [Fees](/agentdex-docs/trading/fees.md)).

### Direction of payment

| Funding rate | Who pays | Who receives |
| ------------ | -------- | ------------ |
| Positive     | Longs    | Shorts       |
| Negative     | Shorts   | Longs        |

If the contract is trading **above** the index, the rate trends positive: longs subsidise shorts, nudging the price back down. The reverse applies below the index.

### How the rate is computed

The funding rate is derived from a **premium index** that measures how far the order book sits above or below index price, sampled continuously through the interval and aggregated. Two terms feed it:

* **Bid component** — `impact_bid − mark_price`
* **Ask component** — `mark_price − impact_ask`

Both use **impact prices** (the volume-weighted price to sweep a configured depth of the book), not raw best bid/ask. The premium is `(bid − ask) / spot_price`. A smoothing window (SMA) is applied before the rate is published, and the result is clamped to a per-instrument cap so a transient dislocation can't produce a runaway payment.

The interest-rate component (typical of TradFi swaps) is set to zero on most instruments at launch and may be re-enabled per instrument later.

### Funding interval and settlement

Funding is sampled and accrued continuously; the actual cash-flow is settled at fixed intervals. The interval per instrument is part of the contract spec (returned by `get_instrument`) — typically 1 hour or 8 hours, matching industry convention.

At each interval:

1. The engine computes the period rate from the premium index time-series.
2. Each open position pays or receives `position_value × rate` against the **funding partner pool**.
3. The settlement debits `available` (or, if depleted, eats into position margin) for the losing side and credits the winning side.

You can read the live rate via `get_ticker` (`funding_rate` field in extended responses) and the next settlement time via the instrument config. Historical rates are published through the public market-data WebSocket topics in [Websocket API](/agentdex-docs/developers/websocket-api.md).

### Worked example

Long $10 000 BTC. Funding rate +0.01 % for the upcoming interval, payable to shorts.

* Settlement: $10 000 × 0.0001 = $1.00 deducted from your available balance.
* If you flip the position to short before the cutoff, you receive the same $1.00 instead.

Funding accrues continuously, so a position closed mid-interval pays the prorated portion since the last settlement.

### Practical considerations

* **Mean reversion**: in a sustained trend, funding can become the dominant cost of holding a position. A 0.1 % hourly rate compounds to \~10 % a month if it persists — large by any measure.
* **Holding through funding**: opening seconds before settlement and closing seconds after collects (or pays) the full period. Some traders chase this; the engine settles position holders at the snapshot, not those who happen to be on the book.
* **Funding vs. mark price**: funding accrues against the engine's mark price; large divergence between mark and last-trade can produce surprising settlements during volatile periods (see [Mark price](/agentdex-docs/trading/mark-price.md)).


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