Funding Payments

as perpetuals futures do not expire, funding rate payments are used to incentivise traders to restore the perpetual futures' mark price in line with the oracle price each perpetual futures market on sujiko has an isolated funding payment pool this pool is used to pay out and receive funding payments to/from traders with active i e open perpetual futures positions funding is paid directly into/out of a trader’s collateral if a trader is paying funding, their margin ratio will decrease conversely, if a trader is receives funding, their margin ratio will increase funding payments can lead to liquidation if a trader does not actively monitor their active i e open perpetual futures positions funding payments are paid by traders who move the mark price farther from the index price for example, when the mark price is below index price, funding is negative so short positions pay funding and long positions earn funding by opening more short positions, traders are moving the mark price farther from the index price and increasing divergence funding payments are earned by traders who move the mark price closer to the index price for example, when the mark price is below index price, funding is negative so short positions pay funding and long positions earn funding by opening more long positions, traders are moving the mark price closer from the index price and decreasing divergence mechanics funding payments are charged per hour on the hour (or up to 5 minutes over if network conditions are poor) the funding rate is calculated as the average hourly premium multiplied by 1/24 the average hourly premium is calculated as mark twap oracle twap / mark twap where mark twap = (bid twap + ask twap) / 2 twap window = 1 hour each market has a funding rate buffer that stores up to 8760 ( 1 year of hourly funding rates) entries this buffer is used to determine if a market has a persistent funding rate bias on chain a persistent funding rate bias is defined as a scenario where there is consistent funding payments to the same side (i e for the last 80 funding payments, longs have paid shorts every time) the protocol can have asymmetric funding funding payments are capped at 1% per hour and funding rebates at 0 1% per hour if there is an imbalance of longs and shorts in the vamm, the isolated funding rate pool will be used to cover the funding delta between longs and shorts historical funding rates are stored on chain in a buffer on any action with the protocol and if the hour has passed, the funding rate will calculated and added to this buffer trader positions are updated by an off chain keeper whenever the buffer is updated limitations if there is a large oracle vs mark price divergence greater than 50%, funding payments will be paused funding rebate will be capped at 0% if there are not enough funds in the funding pool to cover the next payout this ensures the funding pools aren’t drained the market specific funding pool will be used to pay funding rebates apr calculation apr (annual percentage rate) = rate x 24 x 365 25 apy = (1 + rate) ^ (24 x 365 25) 1 example oracle twap = 110 11 bid twap = 110 01 ask twap = 112 15 mark twap = (110 01 + 112 15) / 2 = 111 08 twap spread = premium = 0 87% next funding rate = 1/24 ((111 08 110 11) / 111 08) 	 \= 0 0363851879% apr = next funding rate 24 365 25 	 \= 0 0363851879 24 365 25 	 \= 318 95% apr