Description

The protocol implements a velocity-based funding-rate model where the velocity is defined as follows:

And the actual funding rate is defined as follows:

This funding rate is calculated as the area under the curve using the below formula:

accumulated_funding_rate_change = int256(
  (absLastFundingRate + (numBlocksToLimit / 2) * absLastVelocity)
      * numBlocksToLimit
  + ((uint256(numBlocksToCharge) - numBlocksToLimit)
      * f.maxFundingFeePerBlock)
);

Here, numBlocksToLimit are the number of blocks for which the area under the curve is required. In cases where numBlocksToLimit is an odd number, there will be a rounding error, due to which the funding rate calculate would not be accurate. For example, when numBlocksToLimit is 1, the value of numBlocksToLimit / 2 would be 0, leading to a funding-rate value slightly less than expected.

Impact

The value of the funding rate would be slightly inaccurate in cases where numBlocksToLimit is an odd integer.

Recommendations

Add 1 to the numBlocksToLimit before dividing it by 2 to fix the rounding error.

Remediation

This issue has been acknowledged by Ostium Labs, and a fix was implemented in commit 74f6cda0↗.