> For the complete documentation index, see [llms.txt](https://academy.horizonprotocol.com/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://academy.horizonprotocol.com/english-v2/futures/futures-trading-on-horizon-protocol/perpetual-futures-deep-dive/dynamic-funding-rate-simplified-example.md).

# Dynamic Funding Rate Simplified Example

Let us assume that the BNB perpetual futures market currently has $100,000 in LONG positions and $20,000 in SHORT positions.

Three scenarios can happen for this market from here:

\- **Skew stays long** — No one enters (or exits) this market. Funding rates will continue drifting upwards. Longs pay shorts an increasing amount over time until it hits the maximum dynamic funding rate according to the formula. If the long skew increases with additional long positions, then the drift upwards will increase in speed.

\- **Skew becomes neutral** — Traders bring the skew to neutral (100,000 LONG and 100,000 SHORT.) Funding rates will decrease towards 0.

\- **Skew flips to short** — Traders flip the skew to SHORT (50,000 LONG and 100,000 SHORT.) Funding rates will decrease past 0 and flip to the other side. Longs pay shorts a decreasing amount each over time it flips and shorts pay longs an increasing amount until it hits the maximum dynamic funding rate according to the formula.


---

# Agent Instructions
This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com.

## 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, and the optional `goal` query parameter:

```
GET https://academy.horizonprotocol.com/english-v2/futures/futures-trading-on-horizon-protocol/perpetual-futures-deep-dive/dynamic-funding-rate-simplified-example.md?ask=<question>&goal=<endgoal>
```

`ask` is the immediate question: it should be specific, self-contained, and written in natural language.
`goal` is optional and describes the broader end goal you are ultimately trying to accomplish on behalf of the user. GitBook uses it to tailor the answer towards what is most useful for that goal.

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.