⚖️Funding Rate
Introducing JOJO Funding Rate
What is Funding Rate?
Funding rates are periodic payments made to either long or short traders, calculated based on the difference between the perpetual contract prices and spot prices. It is designed to prevent long-term discrepancies between perpetual contract markets and spot prices. It is recalculated several times a day – JOJO does this every 8 hours.
JOJO provides a clear display of funding rate and a countdown to the next funding period for the convenience of its users.
How Does Funding Rate Impact Traders?
The impact of funding rates on traders can be significant as funding calculations take into account the amount of leverage used. If a trader uses high leverage and pays for funding, they may suffer losses and end up getting liquidated even in low-volatility markets. Conversely, if a trader collects funding, it can be profitable, particularly in range-bound markets. Therefore, traders can create trading strategies to benefit from funding rates and make profits even in low-volatility markets. Essentially, funding rates are intended to incentivize traders to take positions that maintain perpetual contract prices in line with spot markets.
How Does It Work?
This model of paying a penalty to the side that deviates from the target price to the side that maintains the target price is the funding fee system of perpetual. Through such reward and punishment measures, the designer of perpetual urges the party whose price deviates in the contract market to adjust, and finally makes the contract price converge with the spot price. In the event of a positive funding rate, it is typical for the perpetual contract price to exceed the mark price. Consequently, traders with long positions must pay for short positions. Conversely, a negative funding rate dictates that short positions must compensate long positions. It is important to note that funding rates are exchanged between peers, and as such, JOJO takes no fees from funding rates as they happen directly between users.
How are Funding Rates calculated on JOJO?
Premium calculation
The Funding Rate is determined mainly by the Premium, which measures the deviation between the Futures price and the Index Price (ie the Basis). In order to avoid manipulation, JOJO uses Impact Bid and Ask prices, rather than the highest bid and lowest ask only.
The Impact Bid Price represents the average fill price to execute a sell order with the size of the Impact Margin Notional.
The Impact Ask Price represents the average fill price to execute a buy order with the size of the Impact Margin Notional.
The Impact Margin Notional is the notional available to trade with 1,000 USDC of collateral at the maximum leverage of the specific market. For example, for NEAR-USDC, the maximum leverage is 10x, so Impact Margin Notional is 10,000 USDC.
Every 15 seconds, JOJO computes the Premium index according to the following formula:
Copy
Premium = [Max(0, Impact Bid Price - I) - Max(0, I - Impact Ask Price)] / I
I = Index PricePiecewise linear funding rate function
For each funding period of 8 hours, JOJO calculates the Premium every 15 seconds. The number of Premium points is therefore N = 1,920 points. An Average Premium is then computed:
Copy
Average Premium = (Premium_1 + Premium_2 + ... + Premium_N) / NOnce the Average Premium for the funding period has been computed, a funding piecewise linear function with three regions is applied to the Average Premium
The Funding Function is defined as follows to allow for faster convergence in case the prices deviate significantly:
Copy
Funding Function(x) =
x , if |x| < 0.5%
0.5% * sign(x) + (x - 0.5% * sign(x)) * 2, if 0.5% < |x| < 1.5%
[0.5% + (1.5% - 0.5%) * 2] * sign(x) + (x - 1.5% * sign(x)) * 4, if |x| > 1.5%
NB: x refers here to the Average PremiumLow
|x| < 0.5%
1
Medium
0.5% < |x| < 1.5%
2
Large
1.5% < |x|
4
Interest Rate
To this funding function, we add the second component of the funding rate which is the Interest Rate. By definition, it is equal to:
Copy
Interest Rate = (USDC Interest - Underlying Base Asset interest) / Funding IntervalThe Interest Rate is fixed to be 0.01% for all Perpetual Markets (assuming USDC interest of 0.06%, Asset interest rate equal to 0.03%). JOJO reserves the right to adjust the Interest Rate depending on market conditions.
Final Funding Rate
The final Funding Rate is then a combination of the Average Premium and the Interest Rate.
Copy
Funding Rate = clamp[Funding Function(Average Premium) + clamp(Interest Rate - Funding Function(Average Premium) , Cap IR, Floor IR), Cap Funding, Floor Funding]The funding rate is also capped and floored respectively by a Cap Funding and a Floor Funding. The specific values depend on each perpetual market.
BTC
0.3%
-0.3%
0.03%
-0.03%
ETH
0.375%
-0.375%
0.03%
-0.03%
ARB
0.45%
-0.45%
0.01%
-0.01%
WOO
2.00%
-2.00%
0.01%
-0.01%
LINK
0.375%
-0.375%
0.01%
-0.01%
OP
0.45%
-0.45%
0.01%
-0.01%
SOL
0.4875%
-0.4875%
0.01%
-0.01%
SUI
0.75%
-0.75%
0.01%
-0.01%
TIA
4.00%
-4.00%
0.02%
-0.02%
INJ
3.00%
-3.00%
0.01%
-0.01%
AVAX
0.3750%
-0.375%
0.01%
-0.01%
JUP
4.00%
-4.00%
0.02%
-0.02%
ORDI
4.00%
-4.00%
0.02%
-0.02%
APT
0.3750%
-0.375%
0.01%
-0.01%
BLUR
2.00%
-2.00%
0.01%
-0.01%
WLD
0.75%
-0.75%
0.01%
-0.01%
STRK
4.00%
-4.00%
0.02%
-0.02%
SEI
2.00%
-2.00%
0.01%
-0.01%
DYM
4.00%
-4.00%
0.02%
-0.02%
ETHFI
4.00%
-4.00%
0.02%
-0.02%
ENA
4.00%
-4.00%
0.02%
-0.02%
W
4.00%
-4.00%
0.02%
-0.02%
WIF
4.00%
-4.00%
0.02%
-0.02%
ZEUS
1.50%
-1.50%
0.01%
-0.01%
OMNI
4.00%
-4.00%
0.02%
-0.02%
MERL
1.50%
-1.50%
0.01%
-0.01%
ONDO
4.00%
-4.00%
0.02%
-0.02%
AR
2.00%
-2.00%
0.01%
-0.01%
FIL
0.45%
-0.45%
0.01%
-0.01%
MEW
4.00%
-4.00%
0.02%
-0.02%
BOME
4.00%
-4.00%
0.02%
-0.02%
1000PEPE
2.00%
-2.00%
0.01%
-0.01%
1000BONK
4.00%
-4.00%
0.02%
-0.02%
TON
4.00%
-4.00%
0.02%
-0.02%
1000FLOKI
3.00%
-3.00%
0.01%
-0.01%
STG
3.00%
-3.00%
0.01%
-0.01%
BRETT
2.00%
-2.00%
0.01%
-0.01%
IO
4.00%
-4.00%
0.02%
-0.02%
ZK
4.00%
-4.00%
0.02%
-0.02%
PONKE
1.50%
-1.50%
0.01%
-0.01%
ZRO
4.00%
-4.00%
0.02%
-0.02%
POPCAT
3.00%
-3.00%
0.01%
-0.01%
MKR
0.045%
-0.045%
0.02%
-0.02%
AAVE
1.125%
-1.125%
0.01%
-0.01%
CRV
3.00%
-3.00%
0.01%
-0.01%
LDO
0.45%
-0.45%
0.01%
-0.01%
TRX
0.4875%
-0.4875%
0.01%
-0.01%
ORDER
4.00%
-4.00%
0.02%
-0.02%
POL
0.45%
-0.45%
0.01%
-0.01%
TAO
4.00%
-4.00%
0.01%
-0.01%
EIGEN
4.00%
-4.00%
0.02%
-0.02%
MOODENG
4.00%
-4.00%
0.02%
-0.02%
1000SHIB
0.04875%
-0.04875%
0.01%
-0.01%
1000APU
4.00%
-4.00%
0.01%
-0.01%
GOAT
4.00%
-4.00%
0.02%
-0.02%
MOG
2.00%
-2.00%
0.01%
-0.01%
SPX
4.00%
-4.00%
0.02%
-0.02%
LINA
3.00%
-3.00%
0.01%
-0.01%
PNUT
4.00%
-4.00%
0.02%
-0.02%
ACT
4.00%
-4.00%
0.02%
-0.02%
NEIRO
4.00%
-4.00%
0.02%
-0.02%
CHILLGUY
4.00%
-4.00%
0.02%
-0.02%
CETUS
4.00%
-4.00%
0.02%
-0.02%
COW
4.00%
-4.00%
0.02%
-0.02%
PENDLE
3.00%
-3.00%
0.01%
-0.01%
HYPE
4.00%
-4.00%
0.02%
-0.02%
AIXBT
4.00%
-4.00%
0.02%
-0.02%
TURBO
4.00%
-4.00%
0.02%
-0.02%
PENGU
4.00%
-4.00%
0.02%
-0.02%
AI16Z
4.00%
-4.00%
0.02%
-0.02%
FARTCOIN
4.00%
-4.00%
0.02%
-0.02%
HSK
4.00%
-4.00%
0.02%
-0.02%
ZEN
4.00%
-4.00%
0.02%
-0.02%
BIO
4.00%
-4.00%
0.02%
-0.02%
RUNE
4.00%
-4.00%
0.02%
-0.02%
RAY
4.00%
-4.00%
0.02%
-0.02%
ADA
3.75%
-3.75%
0.01%
-0.01%
AVAA
4.00%
-4.00%
0.02%
-0.02%
S
0.45%
-0.45%
0.01%
-0.01%
TRUMP
4.00%
-4.00%
0.02%
-0.02%
MELANIA
4.00%
-4.00%
0.02%
-0.02%
MODE
4.00%
-4.00%
0.02%
-0.02%
ZEREBRO
4.00%
-4.00%
0.02%
-0.02%
ANIME
4.00%
-4.00%
0.02%
-0.02%
GRIFFAIN
4.00%
-4.00%
0.02%
-0.02%
VINE
4.00%
-4.00%
0.02%
-0.02%
FET
3.00%
-3.00%
0.01%
-0.01%
OM
4.00%
-4.00%
0.02%
-0.02%
PLUME
4.00%
-4.00%
0.02%
-0.02%
BERA
4.00%
-4.00%
0.02%
-0.02%
TST
4.00%
-4.00%
0.02%
-0.02%
ZEUS
4.00%
-4.00%
0.02%
-0.02%
UXLINK
4.00%
-4.00%
0.02%
-0.02%
TOSHI
4.00%
-4.00%
0.02%
-0.02%
LAYER
4.00%
-4.00%
0.02%
-0.02%
IP
4.00%
-4.00%
0.01%
-0.01%
SHELL
4.00%
-4.00%
0.01%
-0.01%
CAKE
4.00%
-4.00%
0.01%
-0.01%
PI
4.00%
-4.00%
0.02%
-0.02%
KAITO
4.00%
-4.00%
0.02%
-0.02%
LTC
0.375%
-0.375%
0.01%
-0.01%
HBAR
2.00%
-2.00%
0.01%
-0.01%
RED
4.00%
-4.00%
0.02%
-0.02%
ELX
4.00%
-4.00%
0.02%
-0.02%
BMT
4.00%
-4.00%
0.02%
-0.02%
Funding Period
The Funding Period for JOJO is dt = 8 hours. The Funding Rate is expressed on an 8-hour basis.
Accrued Funding
Every 8 hours, a position on a Perpetual Futures contract will accrue the following funding:
Copy
Accrued Funding(dt) = Position Size * Mark Price * Funding RateFunding settlement
The accrued funding of an account’s position is settled when a PNL settlement is being called on that account.
Last updated