What Is the “Clamping” Mechanism Used by Some Exchanges on Funding Rates?

Clamping is a risk management measure where an exchange imposes a maximum limit on how high or low the funding rate can be. This mechanism is designed to prevent excessively large funding payments that could destabilize the market, trigger cascading liquidations, or make arbitrage strategies too risky or unprofitable.

It caps the absolute value of the rate, providing a degree of predictability to the cost of holding a position.