Funding

The funding rates mechanism on Vibe keeps perpetual contract prices in sync with underlying spot prices by periodically transferring payments between traders and solvers.

How Funding Rates Work

• Positive Funding Rate When perpetual prices exceed spot prices, traders in long positions pay solvers in short positions, discouraging overextended longs.

• Negative Funding Rate When perpetual prices fall below spot prices, solvers in short positions pay traders in long positions, discouraging overly cheap shorts.

These periodic payments help keep the contract price closely aligned with the spot market, promoting market stability.

Importance for Traders

Funding rates affect your cost of holding positions over time. A rate that favors one side of the market can significantly impact profitability and should be factored into your strategy.

Key Feature of Funding Rates on Vibe Trading

• Solver Pricing Vibe relies on solver quotes for accurate, reliable data in determining funding rates.

• Solver Interaction Competitive, market-driven rates result from real-time interactions between traders and solvers.

• Minimum Threshold If the amount owed is smaller than the blockchain gas cost, no funding payment is processed (as each update requires an on-chain interaction).

Note: Solvers do not charge or credit funding fees if the amount is lower than the blockchain gas cost, as each funding rate update requires an on-chain interaction with the trade position.