dYdX

dYdX funding rates and hourly position payments

dYdX funding rates determine payments between long and short perpetual positions on dYdX Chain. These payments encourage perpetual prices to track the underlying asset. Positive rates mean longs pay shorts; negative rates reverse the payment direction. The amount depends on position size, the oracle price, and the rate applied for that funding period. Funding ticks are hourly under the default configuration, although governance can change that interval. A displayed forecast can change before application, so payment history provides the account-specific amount.

The short version: Funding costs follow position notional, so leverage can magnify their effect relative to the collateral that supports an open position.

Order-book premiums and the interest component

The premium component responds to order-book prices relative to the market's index price for the underlying asset, while the interest component adds a configured baseline. An impact bid estimates the average execution price of a sale at the configured impact notional. An impact ask estimates the corresponding purchase price. These calculations incorporate executable depth, so the latest trade price alone does not determine funding. The premium is positive when the impact bid exceeds the index price and negative when the impact ask falls below it.

Each market also has a default funding parameter that contributes to the final rate. This component can differ between markets, including cross and isolated markets. A zero premium therefore does not necessarily produce zero funding. Under the default hourly schedule, the rate equals the averaged premium divided by eight plus the hourly interest component, subject to the funding cap. Its sign determines which position side pays.

Long and short positions under each rate sign

A positive applied rate creates a funding debit for a long position and a corresponding credit for a short position in that market. A negative rate reverses those effects. This direction follows the funding rate, independently of whether the position has made a trading profit. A profitable long can owe funding, and a losing short can receive it.

These effects describe the funding contribution alone. Account equity also reflects price movements, execution fees, and collateral transfers. Receiving funding does not establish that the overall position is profitable. Historical payments can change direction several times during one holding period.

How large is a dYdX funding payment?

Funding depends on the position's full oracle-valued notional, with the applied period rate determining the amount credited or deducted. Before rounding, a funding payment's magnitude equals oracle-valued position notional multiplied by the absolute rate for that period. The signed relationship is Account funding change = -S × P × R. Here, S means position size in underlying units, positive for a long and negative for a short. P means the oracle price per unit, and R means the applied period rate expressed as a decimal. A positive account change represents a credit; a negative change represents a debit.

The calculation uses exposure, not simply the collateral deposited to support it. Leverage affects the relationship between those quantities. Multiplying notional by leverage again would count that exposure twice. Even with unchanged position size, a different oracle price changes notional and therefore the funding amount. For several funding ticks, the total follows the sum of the separate payments. Using one final price and one final rate for the entire holding period can misstate that total.

Hourly ticks and the funding index

Under the default one-hour tick schedule, the protocol aggregates premium samples from the preceding interval before updating each market's cumulative funding index. Block proposers submit premium votes from their local order books. The protocol combines those votes into samples, then processes the samples into an applied funding rate. Sampling rules and epoch durations are configurable.

Position accounting compares the market's updated funding index with the index already recorded for that position. A subaccount update settles the accumulated difference before applying its position or collateral changes. This separates the market's funding tick from the later settlement of a stored account balance. Counting seconds that a position was open is insufficient to reconstruct its funding liability. Exposure at the relevant index updates, including the ordering of trades and ticks, matters.

The nextFundingRate field describes a forecast for the next interval and can change before application.

Hourly, eight-hour, and annualized displays

Eight-hour and annualized displays rescale funding for comparison; they do not change the default hourly application of dYdX Chain funding. An eight-hour equivalent multiplies the quoted hourly rate by eight. It matches the cumulative rate across eight hourly ticks only if the applied rate stays unchanged. Actual funding across that span follows the separately applied ticks and the exposure at each tick. Simple annualization extends the same assumption across a year. It describes a rate on position notional, not a promised return on deposited collateral. It also leaves out trading costs, changing exposure, and price profit or loss. A historical average and a forecast describe different periods.

Funding caps and market-specific parameters

Funding caps limit the rate using the market's liquidity-tier margin parameters and a configurable clamp factor. The cap relates to the difference between initial and maintenance margin fractions. Limits also apply to premium inputs. These constraints bound a rate within the applicable configuration; they do not establish a maximum lifetime funding bill. Repeated debits can accumulate, and larger notional creates a larger payment at the same capped rate. A funding cap also does not cap trading losses.

Cross and isolated market classifications belong to the protocol's market configuration. Selecting isolated margin for a position is a separate frontend choice. That choice does not, by itself, establish a different market funding baseline. Market data exposes the configured hourly default funding component, while the protocol parameters define sampling and clamp behavior. Reading those values for the selected market avoids assuming that every market has the same interest component or funding limit.

Funding deductions and the margin buffer

Funding debits lower account equity without changing the number of perpetual units held, reducing the buffer above the applicable maintenance margin requirement. Price losses can reduce that buffer at the same time. Credits improve equity, although adverse price movements can outweigh them. Cross-margin positions draw on shared collateral within their subaccount, while frontend isolated positions use separate subaccounts. Funding therefore affects the collateral that supports the relevant exposure. Liquidations can become possible when equity falls below maintenance requirements. An offsetting profit held outside that collateral pool does not automatically support its margin. This matters when a hedge spans separately funded accounts.

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Market rate history and account payment records

Market funding history records applied rates, oracle prices, and effective times, while account funding history records payments for a particular subaccount. The account records include the market, position side and size, rate, oracle price, and payment amount. Matching the period and subaccount distinguishes a market-wide observation from an actual account cash flow. A rate displayed after a payment can already describe a later interval. It cannot explain an earlier debit merely because the market name matches.

Individual subaccount queries and parent-account aggregation cover different scopes. Frontend isolated positions can place relevant records in child subaccounts, so a query limited to the cross subaccount can miss them. Position data also accounts for settled and unsettled funding. An unchanged stored balance does not establish that no funding has accrued. The cumulative index and payment records explain funding separately from deposits, withdrawals, and execution fees, which can also change the account.

Holding, reducing, or closing exposure

Holding an open position preserves its exposure to later funding ticks; reducing its size lowers the quantity subject to subsequent funding. A completed close removes that market exposure. Submitting a closing order does not produce the same account state as an executed close. A partial fill leaves a remainder that can continue to incur funding. Previously accrued funding remains part of the account calculation when the position changes. Entry and exit trades can incur execution fees and slippage, which belong in the same cost comparison. A forecast alone cannot establish whether those costs will be recovered through later funding.

Funding hedges and changing carry

Funding hedges combine a perpetual position with offsetting price exposure, leaving funding differences and execution costs as components of the combined result. A spot holding paired with an opposite perpetual position can reduce directional exposure. A hedge across perpetual markets also includes the funding that each leg pays or receives. Price differences between the legs can move, and each leveraged account needs its own margin support. Receiving funding on one leg therefore does not make the arrangement risk free. The expected carry changes when rates reverse, the hedge sizes diverge, or execution costs consume the funding receipts.

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