Dydxexchange funding rates: Long and Short Payments

Long and Short Exposure at the Same Rate

Long and short positions face opposite funding cash flows in the same perpetual market. A long gains price exposure in the upward direction and pays funding when the applied rate is positive. A short takes the opposite price exposure and receives funding at that positive rate. Negative funding reverses the payer and recipient, and neither direction carries a permanent entitlement to funding income because the market can move between positive and negative rates during the holding period.

An unfilled opening order creates no position exposure by itself. Funding follows the position that a fill establishes, including any existing exposure that the account already holds. Canceling an order leaves an existing position’s funding obligation intact. The relevant choice therefore involves both the intended market direction and the cost of keeping that exposure open, alongside the execution price that available order-book liquidity permits. The dYdX Operations Services trading frontend restricts users in the United States, Canada, the United Kingdom and other restricted jurisdictions. In close-only mode, it permits reducing or closing positions but blocks opening new exposure.

The Rate Display and Payment Record

The market’s Funding view shows rate information, while account history shows payments associated with actual position exposure. The trading interface offers hourly, eight-hour and annualized presentations. Identify the selected time basis before estimating a debit or credit. A market-level percentage cannot tell you the account’s payment amount without the position size and valuation inputs, and a displayed estimate can change before the protocol applies funding.

Legacy v3 trading and funding payments halted on October 28, 2024. Its archived rates describe that earlier system, separately from dYdX Chain records.

Funding payment history provides the account-specific comparison. Match the market and payment time to the exposure that the account held, rather than multiplying an old quote by today’s position value. The Indexer API also exposes historical market rates and account funding payments as separate datasets. A market rate describes the contract; a payment record describes an account’s debit or credit.

A difference between estimated and recorded funding does not, by itself, establish an incorrect charge. The applied rate, oracle valuation or position size may differ from the estimate’s inputs. History filters can also select a different time window.

When Does Funding Affect an Open Position?

An open position takes on funding when dYdX Chain advances the market’s cumulative funding index. The default dYdX Chain funding-tick interval is one hour. The index accumulates the market’s funding obligations over time. Account settlement applies the difference between that index and the position’s stored index. This bookkeeping lets the protocol settle accrued funding during account changes without requiring a separate wallet transfer for every funding update.

Funding exposure follows the position that exists at the relevant index update. A pending closing order leaves the position open until execution changes its size. A partial closing fill leaves the remaining exposure subject to later funding. A settlement recorded during a position change can also include funding that accrued earlier, so the recording time alone does not identify when the obligation arose.

Position Value and Leverage

Funding size follows the position’s oracle-valued notional, which means its size multiplied by the oracle price. For one hourly update, accrued funding equals -S × P × r in quote currency, before protocol rounding. Here S is signed position size, P is oracle price and r is the hourly rate as a decimal. Long size is positive; short size is negative. Positive cash flow credits the account. Higher exposure relative to collateral makes the same funding rate consume a larger share of that collateral.

Hourly, Eight-Hour and Annualized Figures

A funding percentage needs a time basis before it can support a cost comparison. An eight-hour equivalent expresses the rate over a longer reference period, while an annualized figure extrapolates it across a year. Neither display changes the default hourly funding cadence. Comparing percentages with different time bases can reverse an apparent ranking of funding costs or receipts, even when their underlying cash flows have not changed.

The protocol’s funding calculation uses an eight-hour realization period, then scales the rate for the funding-tick duration. For a one-hour tick, that conversion divides the eight-hour rate by eight. Actual cumulative payments still depend on the rates and position values at successive updates. Multiplying a single hourly quote across a planned holding period assumes unchanged inputs. Annualization carries that assumption much further and cannot establish the funding income that a position will ultimately receive.

Funding Debits and Margin Capacity

Funding debits can reduce the equity available to support an open position even when its market price stays unchanged. Funding debits reduce the account’s USDC quote balance. Account equity combines that balance with the value of its positions. Initial margin governs the collateral needed to open or increase exposure; maintenance margin governs whether the existing exposure has sufficient support. Repeated debits can narrow the gap between equity and the maintenance requirement.

The liquidation engine can partially or fully close positions when account value falls below maintenance margin. A funding receipt improves equity at that update, while an adverse price move can still outweigh the credit. Additional collateral increases the margin cushion for unchanged exposure, but the funding calculation still uses position size and oracle price. Shared collateral also means that funding on one position can affect the margin capacity supporting other positions in the same cross-margined account.

What Does a Funding Cap Actually Limit?

A funding cap limits the applied rate’s magnitude, while total funding cost also depends on exposure and holding time. The protocol combines its funding components and clamps the rate against bounds derived from the market’s liquidity tier. The tier’s initial and maintenance margin fractions contribute to that bound. Governance can adjust funding parameters, so a cap belongs to an applicable market configuration.

The documented default v4 formula sets the eight-hour cap at 600% multiplied by the difference between the tier’s initial and maintenance margin fractions. That figure describes the rate bound on an eight-hour basis, so an hourly payment requires the corresponding time conversion; applying the full eight-hour bound to every hourly payment would overstate that configuration’s limit.

A cap also leaves several cost inputs variable. Position valuation can change, successive funding rates can differ and continued exposure creates further funding obligations. The rate limit does not set a maximum dollar loss for the position. Price losses, execution fees and liquidation effects remain separate from the funding-rate bound.

Order-Book Premiums and Market Parameters

The funding premium measures the perpetual market’s pricing relative to its index price using order-book depth. Premium-based funding encourages perpetual prices to track their underlying reference by changing the cost of holding long and short exposure. The premium calculation compares impact bid and impact ask prices with the index price. The impact bid is the average execution price for a sell of the configured impact notional. The impact ask uses a buy of that size. The market’s liquidity tier supplies the impact notional, so these prices reflect depth beyond a single last trade.

Block proposers submit premium votes based on their local order books. The protocol forms samples from those votes and aggregates the samples for a funding tick. A market also has a configured baseline interest component. The documented v4 defaults give cross markets a zero interest component and isolated markets an interest component of 0.125 basis points per hour. Governance can change these parameters; they do not promise a fixed final funding rate.

An isolated market’s protocol classification differs from choosing isolated margin for a position in a cross market. The market’s funding parameters determine its baseline component. Choosing how to allocate collateral does not itself replace those parameters. The final sign reflects the combined components, which explains why one price comparison cannot always predict the next payment direction.

Keeping Exposure or Closing the Position

Keeping a perpetual position open preserves its price exposure and its participation in subsequent funding updates. Funding receipts can offset part of the holding cost, while funding debits add to it. Net profit or loss also includes the position’s price movement and execution costs. A receiving rate alone therefore cannot establish whether the trade will make money, especially when the quoted rate represents only one interval.

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A completed closing fill removes the corresponding exposure from later funding calculations; an unfilled exit order does not. Partial closure retains funding on the remaining size, and earlier accrued funding still belongs in the account’s settled result. Holding preserves the intended market exposure with continuing funding uncertainty. Fully closing removes that exposure and future funding on the position, while realizing the exit at the price that the closing trades achieve.