We have recently made a few important changes to the mechanics of funding rate for perpetual contracts. While the user guide has been updated and has full details of how funding works, we are highlighting the changes that have been made here. The formula used to compute funding has been changed The new formula for funding rate is: Funding Rate = Avg Premium + clamp (Interest Rate - Avg Premium, 0.05%, -0.05%) where, Avg Premium is the 8-hour TWAP of the contract's premium (i.e. % difference of the contract's mark price and the underlying index price) and Interest Rate is the differential of borrow rates of the quoting currency and base currency. As of now, Interest Rate for all contract is set to 0.01%/ 8h. After this change, our funding computation formula is in line with the industry. Further, the use of clamp function helps to keep the magnitude of funding low. For e.g. when Avg Premium varies from (-0.04%, 0.06%), the funding rate will stay flat at 0.01%. Funding now changes once every 8 hours Previously, funding rate was computed every minute. Thus, funding rate could potentially change every minute. Now, funding is computed once every 8 hours. So, funding rate stays flat for 8 hours. Again, this is in line with the well accepted industry practices. The lesser fluctuation/ greater certainty in funding rates will also enable traders to run long/ short strategies for perpetual/ futures and perpetual/ spot pair trades more profitably. Funding is still exchanged every minute This is where we are different from many of our peers. On most derivative exchanges, funding is exchanged between longs/ shorts once every 8 hours. On Delta Exchange, this exchange of funding is a continuous process that happens once every minute.This means as long as you are in a position, you are always either receiving funding or paying funding. Funding Caps are lower In response to demand from our traders, we have made funding caps tighter for most contracts. With the exception of a few contracts, funding caps for perpetual contracts are now set at 0.1%/ 8h. You can find the funding cap for a contract in its specifications. Impact sizes are lower We have also lowered impact sizes for most contracts, bringing them in line with market accepted practices. The impact size for a contract is pertinent to computation of mark price and hence, computation of the funding rate. You can find the impact size for a contract in its specifications.