Funding

Graded Pokémon has had a strong month, and plenty of others have noticed too. Half the hobby wants to be long PKMN, and on the DEX that appears as a market trading slightly above the index: more buyers of the contract than sellers, so it clears at a premium. A perpetual has no expiry date to force the two prices together again. Funding does that job, and on a collectors' market it also tells you something real about the crowd.

Payments between longs and shorts

Funding is a periodic payment that moves between the two sides of the market. When the market trades above the index, longs pay shorts. When it trades below, shorts pay longs. The size of the payment follows the size of the gap: a market sitting just above the index generates almost nothing, while one stretched toward the edge of its band generates much more. No one sets the rate by hand. The trading infrastructure calculates it every interval from where the market stands against the level Quanta publishes.

The result is a restoring force. Holding a long at a premium costs a little each interval and holding a short earns a little, which draws traders onto the paid side until the gap closes. The mark price band is the hard limit: whatever the last trade prints, the mark price your position is valued at stays inside it (Index price, mark price, last price). Funding is the steady pressure inside the band, working continuously so the market rarely gets close to the edge.

How it reaches your position

Funding applies to positions that are open when an interval settles. At each settlement the payment is calculated on your position size, meaning your exposure to the index, and applied to that position's margin: a payment received increases the margin, a payment made reduces it. Over a long hold these small amounts build up into the accrued funding shown next to your unrealized PnL, and it is realized together with everything else when you close (Perpetuals, explained for collectors).

Since funding is charged on exposure rather than on margin, leverage scales its weight the same way it scales a price move: the same rate is a bigger share of a smaller margin. And since a payment made reduces the margin, funding paid over a long stretch gradually moves your liquidation price closer, even if the index stays still (Margin, leverage and liquidation).

Funding is not a fee. Every unit one side pays goes to the other side, and none of it goes to Quanta. The fees the DEX does charge, taker and maker, are on Fees.

What to expect on a collectors' market

Collectors are long by default. Owning cards is already a long position in cards, and most people who arrive at a graded Pokémon market bring that view along. Collectors' markets tend to lean long, and a market that leans long sits above the index more often than below it, so funding on PKMN tends to run positive for long stretches.

That reads two ways. If you are short, positive funding pays you, interval after interval, for sitting on the side the crowd has left empty while your view plays out. If you are long, positive funding is a running cost of the hold, and on an index that moves slowly by design it is part of the maths of a long position. The market page shows the current and predicted rate, so you can factor it in when you open and while you hold.

The lean is a tendency, not a rule. After a sharp fall, shorts can pile in the same way, the market slips below the index, funding turns negative and the roles reverse.

Where to see it

Next to the premium or discount gauge on /trade/PKMN, the market page shows the current funding rate with its sign and the predicted rate for the next settlement, estimated from where the market trades now. Positive means longs are paying; negative means shorts are. Each open position shows its accrued funding next to its margin and unrealized PnL (The DEX walks through the page).

Interval and caps

How often funding settles, and the maximum a single settlement can charge in either direction, are market parameters, shown on the PKMN market page. Funding is also one of the market's three health conditions: if the rate moves outside its bounds, the market switches to reduce-only until it is back in range, so every position can always close and no new risk builds up (Market safeguards).