# Negative Funding Rate Mitigation When phase 2 is live one of the biggest challenges will be what the Bamk.fi protocol will do when funding rates are negative. Perpetual swaps work via a funding rate, which can either be positive or negative. When funding rate is positive, long positions are paying short positions. When funding rate is negative however, Bamk.fi will be paying long positions to keep its short positions opened. Alongside a reserve fund to weather these periods of negative funding, Bamk.fi will introduce these two policies depending on whether funding is positive or negative. ## Funding Rate Policies on Minting and Redemptions * During positive rates on perpetuals, minting and redeeming are both open and BAMK rewards are given to holders of NUSD * During negative rates on perpetuals, minting is suspended until rates are positive again, redeeming is open and BAMK rewards are given pro rata to redemptions per block The above policy means NUSD TVL will remain dynamic based on market conditions, leading to greater resiliency. --- # 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://docs.bamk.fi/bamkfi/roadmap/negative-funding-rate-mitigation.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.