# Funding rate

The Funding Rate comprises two parts: the Interest Rate and the Premium.

The Premium is what causes the perpetual contract price to align with the underlying asset price.

The main component of the funding rate is a premium that takes into account market activity for the perpetual. It is calculated for each market, every minute (at a random point within the minute) using the formula:  

{% code overflow="wrap" %}

```
Premium (P) = (Max(0, Impact Bid Price - Index Price) - Max(0, Index Price - Impact Ask Price)) / Index Price
```

{% endcode %}

<table><thead><tr><th width="196.5"></th><th></th></tr></thead><tbody><tr><td><strong>Impact Bid Price</strong></td><td><mark style="color:yellow;">Average execution price for a market sell of the impact notional value</mark></td></tr><tr><td><strong>Impact Ask Price</strong></td><td><mark style="color:yellow;">Average execution price for a market buy of the impact notional value</mark></td></tr><tr><td><strong>Impact Notional Amount</strong></td><td><mark style="color:yellow;">500 USDC / Initial Margin Fraction</mark></td></tr></tbody></table>

### Funding payments

At the start of each hour, an account receives USDC (if F is positive) or pays USDC (if F is negative) in an amount equal to:

```
F = (-1) × S × P × R
```

* S is the size of the position (positive if long, negative if short)
* P is the oracle (index) price for the market
* R is the funding rate (as a 1-hour rate)

{% hint style="info" %}
The minimum funding rate is -0.75% and the maximum funding rate is 0.75%. There is a limit to how quickly the admin can change the funding rate, but this does not take effect during normal operation.
{% endhint %}

Funding Payment Inclusion - Subject to funding if you hold position at payment interval


---

# Agent Instructions: Querying This Documentation

If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question.

Perform an HTTP GET request on the current page URL with the `ask` query parameter:

```
GET https://prodigyfi.gitbook.io/trading-parameters/trading-basics/funding-rate.md?ask=<question>
```

The question should be specific, self-contained, and written in natural language.
The response will contain a direct answer to the question and relevant excerpts and sources from the documentation.

Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.