# Funding Rate Higher utilization of the liquidity pool for positions results in a less liquid Marginal market. This should decrease the profitability of arbitrage opportunities via Marginal replicated swaps and cause larger price deviations from the spot market. To further incentivize price convergence, the Marginal pool charges a typical perpetual funding rate on outstanding positions. Each trader's position debt changes based on the deviation in the time-weighted average of the Marginal pool price relative to the oracle price fetched from the associated Uniswap v3 spot market. Positions charged funding through debt increases are pushed closer to liquidation, incentivizing earlier settlement. The debt the position owes (dxt , dyt ) becomes time dependent with funding. At position open: dx0 = dx dy0 = dy However, for the same leveraged long X relative to Y , the position Y token debt is altered based on the relative difference in Marginal time-weighted average price versus the Uniswap spot time-weighted average price: dyt+τ = dyt °§ (Pt,t+τ / . Pt,t+τ )τ/T This produces continuous, in-kind funding with period T an immutable on the pool. It has the effect of paying or receiving funding from the position’s profit or loss. The X token debt remains unchanged. --- # Agent Instructions: Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter: ``` GET https://marginal.gitbook.io/docs/protocol/funding-rate.md?ask= ``` The question should be specific, self-contained, and written in natural language. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.