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August 12, 2019

What is funding?

A perpetual contract is designed to trade close to spot. Funding is the mechanism which helps to achieve this. It is a series of continuous payments that are exchanged between longs and shorts in a perpetual contract. 

When a perpetual contract is trading at a premium to spot, funding is positive and longs pay shorts. This creates a downward pressure on the contract’s price. Conversely, when a perpetual contract is trading at a discount to spot, funding is negative and shorts pay longs. In this situation, there is an upward pressure on the contract’s price.

It is important to note that funding payments are completely peer to peer. Delta Exchange does not charge any fees on funding payments. 

You can see complete details about funding here

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