💷Funding

The Vibe Trading funding rates mechanism keeps the perpetual contract price aligned with the underlying asset's spot price. This is performed using periodic payments between traders and solvers.

How Funding Rates Work

Funding rates fluctuate based on the price difference between the perpetual contract and the spot price.

• Positive Funding Rate: Occurs when the contract price exceeds the spot price, causing traders with long positions to pay solvers with short positions. This discourages holding long positions when the contract price is significantly higher than the spot price.

• Negative Funding Rate: Happens when the contract price is below the spot price, resulting in solvers with short positions paying traders with long positions. This discourages holding short positions when the contract price is significantly lower than the spot price.

This mechanism ensures the perpetual contract price closely matches the spot price, maintaining market stability and fairness.

Importance for Traders

Understanding funding rates is crucial for traders on Vibe Trading. These rates affect the cost of maintaining open positions and should be considered when planning trading strategies, as they impact trade profitability over time.

Key Feature of Funding Rates on Vibe Trading

Solver Pricing: Vibe Trading’s pricing is primarily influenced by Solvers, providing accurate and reliable data for calculating funding rates.

Solver Interaction: Funding rates are determined by interactions between traders and solvers, ensuring competitive and market-driven rates.

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.