How does funding work in SYMMIO?

What are Funding Rates?

Funding rates are periodic payments exchanged between traders to keep the price of a perpetual futures contract aligned with the actual market value of the underlying asset. In simple terms, they're a way to ensure that the contract’s price remains in sync with the real asset price without needing a set expiration date for the contract.

Why Do We Need Funding Rates?

Unlike traditional futures contracts, perpetual contracts rely on funding rates to balance demand between traders taking long and short positions. In SYMMIO’s system, this is managed by solvers and streamed to frontends. When a trader sends a quote with SYMMIO he sets a maximum funding rate. The solver (or hedger) accepts the position and begins to charge a funding rate. This funding rate is essentially a cost (or sometimes a gain) of holding the position. The funding rate charged by the solver is based on market conditions.

How Does Funding Work on SYMMIO?

In SYMMIO, funding rates are applied periodically. Each funding period, known as an epoch, has a specific timeframe during which these rates can be charged. If a position remains open through an epoch’s funding window, a funding rate may be applied to that position. However, if a position closes before this window, it might not incur a funding charge at all. You can read more about how this is approach is integrated here.