Funding Rate
The funding rate is a recurring payment exchanged between long and short traders in perpetual contracts. Its core job: keeping the mark price of perps in sync with the true spot index.
How Funding Rate Works
If the funding rate is positive: Longs pay shorts.
If it’s negative: Shorts pay longs.
This incentive structure helps correct price imbalances between the perp and underlying spot price. If demand pushes the perp above spot, positive funding motivates traders to short and pull prices back—or vice versa.
Funding Rate on Hyperliquid
Funding is calculated & paid out every hour—more frequent than most platforms, for tighter market tracking.
You only pay or receive funding if you have a position open at the funding snapshot.
Payments are proportional to your position size and the current funding rate.
Why It Matters
Funding rates can impact your PnL even if prices don’t move. Paying high funding can reduce returns over time; earning funding can bump up your gains. Always factor in funding when managing perp positions!
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