Does it not make more sense to set these values to create a positive skew in the funding rate? Because then that gives MMs the incentive to actually come to our trading venue and hold the short exposure here rather than elsewhere? Realistically most of the takers will be wanting to go long on the perps since Bitcoin and Eth are highly asymmetrical assets. So skewing the funding rate positive entices MMs to come and provide liquidity on our perps because they can hold the short exposure then hedge it elsewhere and earn the funding rate. So if we just leave these params at 0 then it is less attractive for MMs to provide liquidity on our perps.
With no skew to the funding rate then there is only incentive for MMs to hold short exposure while the price is highly deviated, as soon as the mark price TWAP returns to par with the spot price TWAP then the funding rate goes to 0 and there is no longer any incentive to hold the short exposure. So realistically the deviation might not even return to par because MMs might just close out their short exposure and go to another perp venue that has a positive skew on funding rates because it’s more profitable for them to do so.
I think we should update the market soon after enactment with a positive interest rate and some reasonable clamp values.