> For the complete documentation index, see [llms.txt](https://learn.trovemarkets.com/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://learn.trovemarkets.com/oracle/funding-rates.md).

# Funding rates

### Funding calculation

The oracle price helps calculate funding rates (payments between long and short traders). To help balance liquidity and maintain mark to oracle price.

{% hint style="info" %}
Funding = [rate calculation](/misc/appendix.md#key-formulas), paid every 8 hours
{% endhint %}

***

### Rate calculation

Funding Rate = Average Premium Index (P) + clamp (interest rate - Premium Index (P), -0.0005, 0.0005)

$$
Funding=P+clamp(I−P,−0.0005,+0.0005)
$$

[Standard](https://hyperliquid.gitbook.io/hyperliquid-docs/trading/funding) by HyperLiquid

### How It Works

* If **Mark > Oracle**, longs pay shorts.
* If **Mark < Oracle**, shorts pay longs.
* Payments occur periodically (e.g., every 8 hours), calculated using the volume-weighted TWAP of the mark–oracle difference.

#### Safeguards

* Excludes tail-window samples and self-trades.
* Attenuates or pauses funding in shallow-liquidity periods.
* TWAP averaging prevents price “gaming” near funding windows.

#### Example

```
External Index = 200
Internal Mark EMA = 250
Oracle = (200 × 0.6) + (250 × 0.4) = 220
```

If mark trades at 230 → mark > oracle → longs pay shorts → shorts enter to earn funding → price normalizes.


---

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