Funding Rate

Funding rates are a way to keep the price of a perp contract in line with the reference price of the asset.

Every hour, traders on one side of the market (either longs or shorts) pay a small fee to the other side — depending on whether the contract is trading above or below the oracle price of the asset. If the perp is priced higher than the oracle price, longs pay shorts. If it’s lower, shorts pay longs.

These payments go directly between traders – Ventuals doesn’t take a cut – and they help keep the market balanced by nudging prices back towards the reference price.

How is the funding rate calculated?

The funding rate on Ventuals is calculated in the exact same way as funding rates on Hyperliquid, except for a multiplier m that is applied to the final outputted funding rate.

The funding rate multiplier m on Ventuals is currently set to 0.04575 on testnet.

The multiplier creates a dampening effect on funding payments, which allows for wider divergences between mark and oracle prices compared to crypto perps that use realtime CEX prices as the oracle.

Funding rates are dampened in the system to allow for price discovery through sustained divergence between mark and oracle prices, as the 8hr EMA of the mark price is a 50% weighted component of the oracle price.