At a positive rate, longs pay shorts (a holding cost for longs, income for shorts); at a negative rate, shorts pay longs. Estimates assume the rate holds constant — real funding changes every interval. Educational, not financial advice.
How funding works
Funding is the mechanism that keeps a perpetual tethered to spot. Each interval, one side pays the other in proportion to position size, nudging the crowded side to close. A persistently high rate is both a real cost and a crowding signal — read the full explainer on funding rates, or scan funding across 300+ Hyperliquid markets on the live map.
Worked example. Hold a $10,000 long at a 0.01% hourly rate. Each hour you pay $10,000 × 0.0001 = $1; across 24 settlements that is $24 a day, and annualized it works out near 88% APR. The same rate at an 8-hour interval costs $3 a day. Funding only bites while you hold, so it matters far more to a multi-day position than an intraday one — and because the rate resets every interval, treat these figures as the cost if the rate holds, not a fixed bill.
FAQ
How is a funding payment calculated?
A funding payment is your position’s notional value multiplied by the funding rate for that interval. On a $10,000 position at a 0.01% rate, you pay or receive $1 that interval. It is exchanged between longs and shorts, not paid to the exchange.
Who pays funding — longs or shorts?
When the funding rate is positive (the perpetual trades above spot), longs pay shorts. When it is negative, shorts pay longs. Funding nudges the crowded side to close, keeping the perpetual tethered to spot.
How often is funding paid?
It varies by venue. Many centralized exchanges settle funding every 8 hours; Hyperliquid settles hourly. More frequent funding means holding across each settlement incurs (or earns) the payment more often.
Can I earn funding instead of paying it?
Yes. Funding flows from the crowded side to the other, so whoever is positioned against the crowd receives it. When funding is positive you earn it by being short; when it is negative you earn it by being long. That income is a real yield, but it comes with directional risk — you are on the less-crowded side for a reason, and price can still move against you.
What counts as a high funding rate?
Judge it annualized, not per interval. A 0.01% rate looks tiny, but at hourly settlement it compounds to roughly 88% APR — a meaningful drag on a held long. Rates sit near zero in balanced markets and spike when positioning gets one-sided, so a persistently elevated rate is both a cost to budget and a crowding signal to respect.
Learn the concepts
Funding is a positioning gauge as much as a cost. Pair it with open interest to tell a crowded, convicted move from a hollow one, and see where it sits in the wider microstructure picture. To rank the whole venue by how stretched funding is right now, use the funding rate scanner or the live Hyperliquid funding map.