> ## 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

$$
\text{funding} = \left(\text{mark price} - \text{index price}\right) \times \text{rate}
$$

* **When $\text{mark price} > \text{index price}$:** Longs pay shorts (incentivizes selling, reduces perp price)
* **When $\text{mark price} < \text{index price}$:** 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:

$$
\text{funding payment}
= \left(\text{current accumulator} - \text{snapshot accumulator}\right)
\times \text{position size}
$$