Funding rates explained

Funding is the payment that passes between long and short traders on a perpetual futures market every hour. Each payment is small, but on a position you hold for days it can matter as much as trading fees, so it’s worth understanding before you hold anything overnight.

Why perps need funding

A traditional futures contract converges on the underlying asset’s price because it eventually expires and settles. A perpetual future never expires, so something else has to stop its price from drifting away from the asset it tracks. That something is funding.

On NyxGo, the perp price is compared with an oracle price: a weighted median of prices from major centralized exchanges, updated by the validators roughly every three seconds. When the perp trades above the oracle, the funding rate rises and longs pay shorts. Holding a long becomes more expensive and holding a short becomes more attractive, which pushes the perp price back down. When the perp trades below the oracle, the pressure runs the other way.

Who pays whom

The sign of the rate tells you the direction:

Funding rate	Longs	Shorts
Positive	Pay	Receive
Negative	Receive	Pay

Funding on NyxGo is peer-to-peer. It moves directly between traders, and the exchange collects no fee on the payments. It isn’t a NyxGo fee either. At each hourly interval, the payment is added to or subtracted from the balance of everyone holding a position.

How the rate is calculated

The exchange NyxGo uses calculates it in two parts.

• The premium. Every 5 seconds, the exchange measures how far the perp’s order book sits above or below the oracle price. It uses the prices you would get trading a set notional size, not just the best bid and ask. These samples are averaged over the hour.
• The interest rate. A fixed component of 0.01% every 8 hours, which is 0.00125% per hour, paid to shorts.

They are combined like this:

funding rate = average premium + clamp(interest rate − average premium, −0.05%, +0.05%)

The clamp means that when the premium stays close to the interest rate, the funding rate settles at exactly the interest rate, which is a small positive rate. When the premium moves further away, the rate follows it.

The formula produces an 8-hour rate, and one eighth of it is paid each hour. Funding is also capped at 4% per hour. The payment for a position is:

position size × oracle price × funding rate

Note that the payment uses the oracle price, not the mark price.

A worked example

Say you are long 200 coins, the oracle price is $50, and the hourly funding rate is +0.0100%.

• Position value: 200 × $50 = $10,000.
• Payment for that hour: $10,000 × 0.0001 = $1.00, paid by you to shorts.
• If the rate held for a full day: $1.00 × 24 = $24.
• Relative to your margin: at 5x leverage you posted $2,000, so $24 a day is 1.2% of your margin every day.
• Annualized: 0.01% × 24 × 365 = 87.6% of the position’s value per year.

If the rate were −0.0100% instead, you would receive $1.00 per hour rather than pay it. Rates change every hour, so treat projections like these as a sense of scale, not a forecast.

Key idea: Funding is charged on the full value of your position, not on the margin you posted. At higher leverage, the same funding rate costs a larger share of your margin.

Where to see funding in NyxGo

NyxGo shows funding in several places:

• The market bar on the trade screen. Under Funding / Countdown you see the market’s current hourly rate and a countdown to the next hourly payment. Open BTC to see it.
• The Markets page. The Markets table has a Funding (1h) column you can sort by. Hover over a rate to see it annualized.
• Your positions. In the Positions tab below the chart, the Funding column shows the net funding a position has paid or received since you opened it.
• Community posts. When a post mentions a market, the post’s page shows a Markets in this post panel that includes that market’s hourly funding rate.

Reading funding as a trader

A few practical ways to think about funding:

• It’s a holding cost, or a holding income. If you are on the paying side, check the rate before you plan to hold for days. A strong idea can still be a poor trade if funding eats the move you expect.
• It shows positioning, not direction. Persistently high positive funding means longs are paying to stay long. That tells you the long side is crowded. It doesn’t tell you the price will fall, and crowded trades can keep working for a long time.
• Don’t trade for funding alone. A position that earns funding can lose far more on price than it collects in payments, and rates can flip sign within hours.
• It changes your margin. Funding you pay comes out of your margin, so over time it moves your liquidation price closer. See Liquidation and how to avoid it.

Perpetual futures are high risk, and nothing here is financial advice. Funding is one of several costs to weigh, alongside fees and the size of the move you are betting on.

Key takeaways

• Funding is an hourly, peer-to-peer payment between longs and shorts that keeps the perp price near the oracle price.
• Positive rates mean longs pay shorts. Negative rates mean shorts pay longs.
• On NyxGo, funding combines an averaged premium with a small fixed interest rate, one eighth of the 8-hour rate is paid each hour, and funding is capped at 4% per hour.
• Payments are position size × oracle price × rate, so higher leverage makes funding a bigger share of your margin.
• In NyxGo, check the market bar, the Markets page and the Funding column in your Positions tab.