Funding rates explained
A funding rate is a small recurring payment exchanged between long and short traders that keeps a perpetual future's price close to the spot price. On Hyperliquid, funding is exchanged every hour. When the rate is positive, longs pay shorts. When it is negative, shorts pay longs.
Why funding exists
A perp has no expiry, so nothing forces its price to converge with the underlying asset at settlement. Funding is the mechanism that does that job continuously. Whenever the perp price drifts away from spot, the funding rate makes it expensive to be on the crowded side and rewarding to take the other side.
How funding works on Hyperliquid
Funding on Hyperliquid is exchanged every hour, which differs from the eight hour cycle common on centralized exchanges. The payment is peer to peer between traders. It is not a fee collected by the exchange or by Dexari.
Funding is calculated on your full position size, not your margin. A $50,000 position pays the same funding whether it is backed by $5,000 or $50,000 of margin.
What it means for your trade
Funding is a cost or an income stream depending on your side and the prevailing rate. Positions held for weeks accumulate meaningful funding, so factor it into longer holds. Persistent extreme funding also tells you which side of the market is crowded.
Frequently asked questions
Who pays funding?
How often is funding exchanged on Hyperliquid?
Is funding a fee charged by Dexari?
Is funding based on my margin or my position size?
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