Funding rates bounding is a parameter managed by the community through the Starkware contract. During volatile periods in 2022, dYdX markets repeatedly hit the bounds on funding rates. This can negatively impact dYdX markets and pricing as traders and participants begin arbitraging the premium across exchanges with higher funding rates. Limiting funding rates can also drive traders away to other markets.
This research will serve to address the issue by analyzing historical data, assessing peer markets, and proposing a change in the existing bounds through a governance vote.