ElementFunding & borrowing
The two costs of holding a position open: adaptive funding and utilization-based borrowing.
Funding
Funding keeps the two sides of a market balanced. When one side has more open interest than the other, the heavier side pays funding to the lighter side. The more lopsided the market, the faster funding adapts against the crowded side.
Funding accrues continuously, including overnight and on weekends while the position stays open. Your position snapshots the cumulative funding index when it opens and settles the difference when it changes or closes.
The funding rate is bounded (roughly 300% APR at the extreme), so the cost of holding even a heavily one-sided position is bounded. It cannot spiral without limit.
Borrowing
Borrowing is what your position pays the liquidity vault for the capital it reserves. It is charged per side and scales with utilization, how much of the available liquidity that side is using. Utilization is clamped at 100%, so an over-reserved market cannot produce a runaway borrowing rate.
Like funding, borrowing accrues continuously and is snapshotted at open. Both costs reduce your effective equity, and therefore your distance to liquidation.