The hourly payment that holds the price in place
A perpetual future never expires, so nothing forces its price back to the asset's. Funding is what does: a periodic fee paid by one side of the contract to the other, computed from the difference between the contract's price and the spot price of the asset.
Who pays whom follows from that difference. If the contract trades above the oracle price, the rate is positive and longs pay shorts. If it trades below, the rate is negative and shorts pay longs. The payment is purely peer to peer: the documentation says no fees are collected on it.
On Hyperliquid it is paid every hour, added to or subtracted from the balance of contract holders at each interval. Hold a position for one hour and you pay or receive once; hold it for a week and you do so 168 times.
The two components
The interest component is fixed. The documentation sets it at 0.01% every 8 hours, which is 0.00125% every hour, or 11.6% APR paid to short, and explains it as standing for the difference in cost to borrow dollars versus spot crypto. It is the same for every asset.
The premium component moves. It follows the difference between the perpetual's price and the underlying spot oracle price, as premium = impact_price_difference / oracle_price, where impact_price_difference = max(impact_bid_px - oracle_px, 0) - max(oracle_px - impact_ask_px, 0). The impact prices are the average prices at which a contract-specific impact notional would execute on each side of the book, so the premium reads the book's depth, not only its best price.
Markets deployed under HIP-3 use a more responsive formula, premium = (0.5 * (impact_bid_px + impact_ask_px) / oracle_px) - 1, which lets their deployers express a wider range of funding behaviour. In both cases the premium is sampled every 5 seconds and averaged over the hour, so one printed trade cannot set the rate.
The formula, and the cap
The documentation gives Funding Rate (F) = Average Premium Index (P) + clamp (interest rate - Premium Index (P), -0.0005, 0.0005). That formula produces an 8-hour rate, and funding is then paid every hour at one eighth of it.
The clamp is what keeps the fixed component from mattering when the premium is large: it can move the rate by at most 0.05% in either direction. When the premium is small, the interest component dominates and the rate sits near its usual slightly positive value; when the premium is large, the premium is almost the whole rate.
Funding is capped at 4% an hour, which the documentation notes is much less aggressive capping than its centralized counterparts, and neither the cap nor the interval depends on the asset. The payment itself is position_size * oracle_price * funding_rate: the documentation stresses that the spot oracle price converts the size to a notional, not the mark price.
A day of funding, as an example
An example, in round figures: a position of $10,000 of notional, held for 24 hours, with the hourly rate steady at three different levels. A real rate changes every hour, so these are arithmetic, not forecasts.
| Hourly rate | On $10,000, an hour | Over 24 hours | What that rate is |
|---|---|---|---|
0.00125% | $0.125 | $3.00 | The interest component alone, which the documentation gives as 11.6% APR paid to short |
0.01% | $1.00 | $24.00 | Eight times it, or 87.6% over a year of 8,760 hours, as if it held |
4% | $400.00 | $9,600.00 | The cap, far above ordinary rates and there for the hours that are not ordinary |
Reading an annual figure needs that same care. This site's funding page shows the hour's rate and the same rate times 8,760, which is what a year would cost if nothing changed. Nothing stays unchanged for a year, so the annual figure measures the present, not the future.
It is paid every hour whatever the position is doing. A position held for weeks on a crowded side can pay more in funding than the move it was opened for, and the rate you read is this hour's. Check it again before deciding to hold.
When the rate turns negative
A negative rate means the contract is trading under the index: the shorts are the crowded side, and a long is paid to hold rather than charged. It happens, and on some markets it lasts, but it is not free money: a side is usually crowded because the price is going its way.
Funding is also not a tax on trading. It is charged per hour of holding, so it matters most to a position measured in days and hardly at all to one measured in minutes. Live rates for every market, hourly and over a year, are on this site's funding page.
How the agent counts it
The daily pilot weighs funding before it opens anything. The two legs of the first step's fee, the funding over the days a position is expected to wait (three by default), the slippage and the model's own dollars are all weighed against the gain aimed at, and a trade whose costs eat that gain is refused, after the model has spoken.
Funding also decides which markets reach the table. In the day's screen of the universe, a side that would pay more than 30% a year of funding loses ten points in the ranking, and the screen records why.