Perps Funding Rate

Perpetual futures do not expire, so funding payments are used to tether perp prices to the underlying index.

Base Funding Fee Rate

The Nad DEX Perps Engine uses a continuous funding model. The base funding fee rate is:

Base formula

FundingFeeRate = P_spot * (P_fair – P_spot) * (Interval / Δt)

Where:

• P_spot – current spot index price.

• P_fair – fair price of the perpetual (e.g., based on last trade or composite).

• Δt – time (seconds) since last funding calculation.

• Interval – chosen funding period (e.g., 1h = 3600s, 8h = 28,800s, 24h = 86,400s).

The funding index for a market updates whenever someone interacts with that market. Unrealized funding accrues over time and is realized when positions are:

• Increased

• Reduced

• Closed

• Or when margin is adjusted

Open Interest Imbalance

The system tracks:

• Total long OI

• Total short OI

Liquidity provided via AMMs (not via limit orders) is exempt from funding.

Actual funding rates adjust based on OI imbalance.

If Longs Pay Shorts

Longs pay shorts

FundingFeeRate_for_Longs = –FundingFeeRate
FundingFeeRate_for_Shorts = +FundingFeeRate * (TotalLongOI / TotalShortOI)

If Shorts Pay Longs

Shorts pay longs

FundingFeeRate_for_Shorts = –FundingFeeRate
FundingFeeRate_for_Longs  = +FundingFeeRate * (TotalShortOI / TotalLongOI)

The side that pays funding pays the full base rate. The side that receives funding gets an amount scaled by the OI ratio, keeping the system fair.

Practical Implications

• During sharp price increases, TotalLongOI often becomes much larger than TotalShortOI.

• If longs pay funding, each short earns more funding per unit of position.

• During sharp price decreases, TotalShortOI tends to dominate, and the opposite applies.

This dynamic encourages balanced positioning in the market.