> ## Documentation Index
> Fetch the complete documentation index at: https://docs.phoenix.trade/llms.txt
> Use this file to discover all available pages before exploring further.

# Funding

> Funding rates keep perpetual prices aligned with spot prices through periodic payments between traders.

## How It Works

**Formula:** `Funding = (Mark Price - Index Price) × Rate`

* **When Mark > Index:** Longs pay shorts (incentivizes selling, reduces perp price)
* **When Mark \< Index:** Shorts pay longs (incentivizes buying, raises perp price)

## Settlement

* Funding accumulates continuously based on hourly snapshots and settles every 24 hours
* Pending funding (but unsettled) can affect account health/liquidation risk in real time
* The maximum funding rate is clamped per market. The percentage is dependent on mark price and can be found in the [Market Parameters](/phoenix/market-parameters).

When a trader interacts with the protocol, their pending funding is calculated as:

`funding_payment = (current_accumulator - snapshot_accumulator) × position_size`