Funding
Funding is paid hourly between longs and shorts so the mark price tracks the index price.
When the mark price trades above the index price, the funding rate is positive and longs pay shorts. When it trades below, the rate is negative and shorts pay longs. Funding settles into the account's realized PnL.
How the Rate Is Set
The premium measures how far the mark price is from the index price: mark price divided by index price, minus one. N1 samples the premium throughout the hour and averages the samples.
Each hour, 1/24 of the average premium is applied as the funding rate, clamped to a per-hour cap.
| Parameter | Value |
|---|---|
| Funding interval | 1 hour |
| Hourly rate | Average premium ÷ 24 |
| Premium sampling | About once per second (orderbook markets); about once every 2 seconds (RFQ markets) |
| Premium cap per sample | ±5% |
| Hourly rate cap | ±0.5% |
Because each premium sample is capped at ±5%, the hourly rate tops out at about ±0.21% (5% ÷ 24). The premium cap binds first, so the ±0.5% hourly cap is not reached at current settings.
Worked Example
An account holds a 1 BTC long. The hourly funding rate is +0.01% and the index price is $60,000.
- Notional: 1 × $60,000 = $60,000
- Funding: $60,000 × 0.01% = $6.00
The long pays $6.00 for the hour, and shorts receive it.
Outages
If a market has an outage of 1 minute or more, funding is not charged for the outage time in that funding period.
RFQ Markets
RFQ markets sample the premium about once every 2 seconds. For each sample, N1 sends a sampling request to RFQ makers and uses the midpoint of the best bid and ask they quote as the mark price. No trade happens and no balances change. If no maker answers, the last mark price is reused. See RFQ Markets.