Funding Rates - Ondo Perps

Overview

Funding rates keep perpetual contract prices aligned with the underlying oracle price. They are periodic payments between long and short holders: when the contract trades above the oracle price, longs pay shorts. When it trades below, shorts pay longs. This creates an economic incentive for traders to take positions that push the contract price back toward the oracle. Funding on Ondo Perps is purely peer-to-peer. The protocol takes no cut. Every dollar debited from one side is credited to the other. The Insurance Fund is not involved in funding settlement.

Funding Interval

Funding is paid every hour, 24 times per day. Intervals align to UTC hour boundaries (0:00, 1:00, 2:00, … 23:00 UTC). The rate is applied on the first tick after each hour boundary.

Scaling Factors

Funding parameters are market-specific. The table below lists standard defaults:

Parameter	Value	What it means
Funding interval	1 hour	How often funding settles
Premium sampling	Every minute	60 samples averaged per interval
Smoothing divisor	8	Divides the average premium before the funding multiplier and cap
Interest rate	0.03%/day (~10.95% APR)	Interest component before the funding multiplier
Rate cap	+/-1%/hour	Hard ceiling, derived from margin safety constraint (see below)

OPENAI applies a funding multiplier of 0.005, compared with 0.5 for standard equity perpetuals. Funding is paid hourly and can be positive or negative. This reduces funding during pre-IPO price discovery, when no public share price is available. See Pre-IPO Market Specifications for OPENAI’s parameters.

Funding Rate Formula

The funding rate combines two components: the average premium index (how far the perp is from the oracle) and a fixed interest rate (the assumed cost of borrowing USDC to hold a position). Step 1: Average the premium The 60 per-minute premium index samples from the hour are averaged, then divided by 8:

Average Premium = mean(premium index samples) / 8

Dividing by 8 scales the average premium to an hourly contribution. The market-specific multiplier and cap are then applied to the rate calculated below. Step 2: Combine with interest rate

Interest = 0.0003 / 24 = 0.0000125 per hour
Base Rate = Average Premium + clamp(Interest - Average Premium,
                                   Interest - Damping Range,
                                   Interest + Damping Range)

The interest rate is fixed at 0.03% per day (equivalent to 0.01% per 8 hours, or ~10.95% APR). This represents the assumed cost difference between holding the underlying asset (0% rate) and borrowing USDC. The damping range limits the interest adjustment. When that adjustment is within the configured limits, the base rate equals the interest component. The market-specific multiplier is applied next. Step 3: Apply the market multiplier

Scaled Rate = Base Rate × Market Funding Multiplier

Standard equity perpetuals use a multiplier of 0.5. OPENAI uses 0.005. These are multipliers applied to the calculated rate, not fixed hourly funding rates. Step 4: Cap

Funding Rate = clamp(Scaled Rate, -Funding Rate Cap, +Funding Rate Cap)

The cap is applied after the multiplier. The standard cap and OPENAI’s configured cap are 1% per hour in either direction. The final rate is rounded to seven decimal places in decimal form before funding payments are calculated. This cap is not arbitrary. The platform enforces an invariant at configuration time:

fundingRateCap ≤ 0.75 × (initialMarginRate − maintenanceMarginRate)

The gap between initial margin and maintenance margin is the liquidation buffer, the cushion a max-leverage position has before liquidation triggers. The cap is set to at most 75% of that buffer, so even a worst-case funding hour only consumes three-quarters of the cushion. The remaining 25% gives you time to react (add margin, reduce size) before the next funding tick. For example, a configured 1% cap sits below the constraint for these tiers:

Tier	Initial Margin	Maintenance Margin	Buffer	0.75 x Buffer	Configured Cap
20x leverage	5%	2.5%	2.5%	1.875%	1%
10x leverage	10%	5%	5%	3.75%	1%

A single hour of max funding cannot, by itself, liquidate a margin-compliant position.

Interest Rate Across Time Periods

These values describe the unscaled interest component, before the market-specific funding multiplier.

Period	Interest Rate
Per hour	0.00125%
Per 8 hours	0.01%
Per day	0.03%
Annualized	~10.95% APR

Funding Payment

Each hour, every open position receives or pays a funding fee:

Funding Payment = Position Size × Oracle Price × Funding Rate

The oracle price (not the exchange mid-price) is used to convert position size to notional value. If the funding rate is positive, longs are debited and shorts are credited. If the funding rate is negative, the reverse applies. The payment is credited to or debited from your USDC balance and reflected immediately in your margin balance.

Worked Example

TSLA is trading at a premium to the oracle. You are long 100 TSLA with an oracle price of $250. Premium index calculation: The orderbook impact prices for a $1,000 simulated order are:

Impact Bid = $251.50
Impact Ask = $252.00
Oracle Price = $250.00

Premium Index = (max($251.50 - $250, 0) - max($250 - $252, 0)) / $250
             = ($1.50 - $0) / $250
             = 0.006 (0.6%)

This sample is positive, meaning the perp is trading above the oracle. Funding rate calculation: Assume the average premium index over the hour is 0.48% (other samples were lower). Divide by 8:

Average Premium = 0.0048 / 8 = 0.0006

Combine with the hourly interest rate, then apply TSLA’s 0.5 multiplier:

Interest = 0.0000125
Damping Range = 0.0000625
Base Rate = 0.0006 + clamp(0.0000125 - 0.0006, -0.00005, +0.000075)
          = 0.0006 - 0.00005
          = 0.00055
Scaled Rate = 0.00055 × 0.5 = 0.000275 (0.0275%)

This is within the +/-1% cap, so no clamping. Funding payment:

Funding Payment = 100 × $250 × 0.000275 = $6.875 (approximately $6.88)

As a long holder with a positive funding rate, you pay approximately $6.88 this hour. This amount is debited from your USDC balance. Short holders of equivalent size collectively receive the same amount.

Large Sustained Premium Example

This example uses the standard equity perpetual funding multiplier of 0.5 and a long $1,000 notional position. OPENAI uses a funding multiplier of 0.005; see Pre-IPO Market Specifications. The perp trades 10% above the oracle for a full hour. The average premium contribution is 10% / 8 = 1.25%/hr. After the interest adjustment and the 0.5 multiplier:

Base Rate = 0.0125 + clamp(0.0000125 - 0.0125, -0.00005, +0.000075)
          = 0.01245 (1.245%)
Scaled Rate = 1.245% × 0.5 = 0.6225%/hr
Funding Rate = clamp(0.6225%, -1%, +1%) = 0.6225%/hr
Payment = 0.006225 × $1,000 = $6.225/hr

The scaled rate is below the 1% cap, so the cap does not bind in this example.

Data Quality

The funding rate depends on 60 premium samples per hour. If too many samples are missing, the rate could be distorted. To guard against this, the platform checks for gaps between consecutive samples: if the largest gap within the hour exceeds 6 minutes, funding for that hour is set to zero. No payment is exchanged, and the system logs a warning. This means a brief oracle interruption (under 6 minutes) is tolerated, but a sustained data gap causes funding to pause rather than publish a rate based on incomplete information.

Closed Underlying Market

When the underlying market is closed and there is no external oracle price, premium samples for those minutes are calculated using an internal price derived from the exchange’s orderbook data. Funding rates are still paid but can be much larger as a consequence of the price discovery mechanism.

Learn More

Premium index

The premium-index formula, impact prices, and how oracle-vs-book is measured.

Mark price protection

Where the mark price comes from and how it’s aggregated.

Fees

Maker, taker, liquidation fees, and how funding differs from a fee.

Liquidations and insurance

The full liquidation waterfall and how the funding-rate cap interacts with maintenance margin.

​Overview

​Funding Interval

​Scaling Factors

​Funding Rate Formula

​Interest Rate Across Time Periods

​Funding Payment

​Worked Example

​Large Sustained Premium Example

​Data Quality

​Closed Underlying Market

​Learn More