Funding

Funding rates are a mechanism to ensure that the price of a perpetual contract closely tracks that of its underlying spot market. The funding rate is a periodic fee that is paid by open positions on one side of the contract (either long or short) to the other side. Crucially, this is peer-to-peer and the protocol does not collect any fees from this.

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Funding Rate Calculation

Every 3 seconds, Calabi calculates the premium of each market, which represents the deviation of the impact price from the oracle price for the corresponding market using the formula: $$premium_t = \frac{\max(0, \text{impact bid}_t - oracle_t) - \max(0, oracle_t - \text{impact ask}_t)}{oracle_t}$$ where

• impact_bid_t / impact_ask_t are the VWAP execution prices for a fixed impact_notional walked against the bid/ask sides of the book at sample t
• oracle_t is the oracle price at that sample

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Interest Rate Component

The interest rate is fixed at 0.01% per 8-hour period (or 0.00125% per hour), reflecting the relative cost of holding USD versus the underlying asset. It’s blended against the realized premium and bounded by a clamp so it only matters near fair value: $$\text{funding rate}_\text{8h} = clamp( \text{interest rate} − \text{premium TWAP}, -c, +c )$$ where c bounds the interest term’s contribution and is equivalent to ±0.05% Funding fees are capped at ±3% .