Funding
Funding is the only price of convexity on Stratos. There is no spread, no markup on the payoff and no premium between mark and index. Longs pay funding; shorts receive it; where no user is short, the pool is the short and collects it.
How it's charged
Each market shows one yearly rate (ETH² has shown about 40% a year on paper). It is charged continuously, not in hourly payments: every market carries a normalization factor NF that decays at that rate, like e^(−rate × time). A long holds units × NF × (S ÷ ref)ᵖ, so the decay quietly shaves value off longs and adds the same amount to shorts' side. The hourly figure in the market bar is just the yearly rate ÷ 8760.
On a $600 long at 42% a year, funding costs about $0.69 a day. The ticket shows this before you open.
Why the rate is what it is
The rate is built from what hedging the position costs the pool:
- the convexity cost of the options strip that hedges the payoff (implied variance × p(p−1)/2, so a cube costs three times a square),
- Derive's spread and fees on that strip,
- perp carry on the linear leg (a power long has a delta the pool hedges with a perp).
It then climbs a ladder from Derive's ask down toward mid as the book proves itself on measured triggers (fill rates, hedge slippage). The trading fee never moves along it.
Straddle funding
Same mechanism, same NF decay, applied to the straddle's size: a long straddle pays size × (1 − NF ÷ NF at entry), a short straddle collects it. A straddle has no linear leg so there is no perp carry in its rate; on paper the ETH² straddle has run at about 32% a year against ETH²'s 42%.
Where it shows
- Market bar: the yearly rate and the hourly rate, with "longs pay shorts".
- Ticket: your funding per day in dollars at the current rate.
- Positions table: funding paid or received so far on each position.
- Trades: the funding over each closed trade's life, separately from its P&L.