A funding rate is a periodic payment between long and short traders that keeps a perpetual futures price anchored to the spot price. When funding is positive, longs pay shorts. When it's negative, shorts pay longs. On Hyperliquid, funding settles every 8 hours and typically ranges from 0.001% to 0.01% per period.
Perpetual futures don't expire. Traditional futures converge to spot price at expiration. Perps don't have that mechanism, so they need something else to keep the price close to spot. That something is the funding rate.
Think of it like rent. If too many people are long, longs pay rent to shorts as an incentive to take the other side. If too many are short, shorts pay rent to longs. The rate adjusts automatically based on how far the perp price drifts from spot.
Funding is quoted as a percentage per period (usually 8 hours on Hyperliquid). A rate of +0.01% means longs pay shorts 0.01% of their position size every 8 hours. That's roughly 0.03% per day or about 11% annualized.
Negative funding means the opposite: shorts pay longs. This happens when the market is heavily short or when the perp trades below spot price.
A rate of 0.0001% is basically flat. Neither side is paying anything meaningful. This is neutral territory.
If you hold a long position and funding is +0.01%, you're paying 0.03% of your position per day. On a $10,000 position, that's $3 per day or $90 per month. It adds up.
Smart traders check funding before entering. If you're going long and funding is already at 0.05% (extremely high), you're paying roughly 55% annualized just to hold. That's a headwind most trades can't overcome.
Some traders specifically farm funding: they go against the crowd, collect funding payments, and hedge their directional risk elsewhere. This is called a funding arbitrage or cash-and-carry trade.
Hyperliquid funding settles every 8 hours, same as Binance and most CEXes. The formula is similar: it's based on the difference between the perp mark price and the spot oracle price, weighted by a damping factor.
The key difference: Hyperliquid's funding goes directly between traders. There's no exchange taking a cut. On Binance, the exchange skims a portion of funding in some edge cases. On Hyperliquid, 100% of funding flows from one side to the other.
Every 8 hours. Settlement happens at 00:00, 08:00, and 16:00 UTC. You only pay or receive funding if you hold a position at the settlement timestamp.
Yes. Negative funding means shorts pay longs. This happens when the market is bearish or when the perp price trades below spot.
No. Funding only applies if you hold a position at the exact settlement time. If you open and close between two settlement periods, you pay zero funding.
Between 0.001% and 0.01% per 8 hours is normal. Above 0.03% is aggressive. Above 0.05% is extreme and usually signals a crowded trade that's about to unwind.
Every market page on 10X shows the live funding rate. You can also check the Hyperliquid API or any Hyperliquid frontend for real-time rates across all markets.
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Last updated 2026-05-17