Ariel Money

Funding Rate

The price of the Perpetual Contract usually differs from the spot market. This divergence signals the collective sentiment of the market. If the majority of traders have a bullish outlook for the underlying asset, the contract price will go up and vice-versa.
In traditional Futures contracts, the Future contract’s price converges to the underlying asset’s price as the settlement date approaches. In Perpetual Futures, to ensure the price doesn’t diverge too much from the broader market ‘Funding rate’ is used. This Funding payment incentivizes the traders to take an unpopular position. If the contract price is above the spot price, longs will pay short and if the contract price is below the spot price, shorts will pay long.
Funding payments will occur every 24 hours and Ariel takes no transaction fee as this transaction happens between the users. We are following FTX’s formula to calculate the funding payment.
Funding Payment = Position*Funding Rate
Funding Rate is calculated by measuring the 1-hour time-weighted average price (TWAP) of the perpetual future and the 1-hour TWAP of the underlying index.
Funding Rate = (TWAPperpetual – TWAP index)/24

Oracles -

For updated live price feeds, Ariel would utilize a combination of
  • Terra's Internal Stablecoin Price feeds
  • Band Protocol Oracles for MAssets and Crypto
  • Custom oracles built with Band protocol in the future