Hyperliquid funding rates, explained

Why perps have funding

A perpetual future never expires, so something has to pull its price back towards the underlying asset. That job falls to funding. When the perp trades above the oracle (spot) price, longs pay shorts; when it trades below, shorts pay longs. The payments go directly between traders: Hyperliquid takes no fee on funding.

The formula

Hyperliquid computes an 8-hour funding rate and pays one eighth of it every hour:

Funding rate (F) = Average premium index (P) + clamp(interest rate − P, −0.0005, 0.0005)

• Interest rate: fixed at 0.01% per 8 hours (0.00125% per hour). On its own this works out at about 11% a year (11.6% APR as the docs quote it, with compounding), paid by longs to shorts.
• Premium: sampled every 5 seconds and averaged over the hour. It measures how far the price at which you could actually trade a set "impact" size sits above or below the oracle price.
• Clamp: keeps the interest adjustment within ±0.05% per 8 hours. When the premium is small, funding settles at the baseline interest rate.
• Cap: funding is capped at 4% per hour. The cap and the hourly interval are the same for every asset.

HIP-3 markets use a slightly different premium calculation based on the midpoint of the impact bid and ask (see HIP-3).

How your payment is calculated

Payment = position size × oracle price × funding rate (the hourly rate). The oracle price, not the mark price, converts your position into a dollar amount. Funding is added to or subtracted from your balance every hour, whether or not you are in profit.

Worked examples

1. Calm market: you are long BTC with a notional of $20,000 and funding sits at the baseline 0.00125% per hour. You pay 20,000 × 0.0000125 = $0.25 an hour, about $6 a day. A short of the same size receives that amount.
2. Over a week: $6 a day is about $42 over 7 days, roughly 0.2% of the notional. On 10x leverage with $2,000 of margin, that is 2.1% of your margin, before any price move.
3. Hot market: if longs are crowded and funding rises to 0.01% per hour (eight times the baseline), the same $20,000 long pays $2 an hour, or $48 a day.
4. Docs example: with an impact bid of $10,100 against an oracle price of $10,000, the premium is 1%. The clamped interest term is −0.05%, so the 8-hour funding rate is 0.95%, paid at one eighth of that each hour.

Run your own numbers with the funding calculator.

What funding means for you

• Short-term trades: funding is usually small compared with fees and price moves.
• Positions held for days or weeks: funding can become your biggest cost, or a source of income if you are on the receiving side.
• Funding reduces your margin: because payments come out of your balance, paying funding moves your liquidation price closer over time. See liquidation.
• Extreme rates are a signal: very high funding means one side is crowded and a sharp reversal is possible. Before the 10 October 2025 crash, The Defiant reported traders paying 70 to 80 basis points a day to stay long.

Funding strategies

Some traders try to earn funding by holding a position on the receiving side and hedging the price risk elsewhere, for example short a perp and long the same asset on spot. This is not risk-free: funding can flip, hedges can be liquidated on one leg, and fees eat into thin returns. See funding rate arbitrage and basis and delta-neutral trading.

Frequently asked questions