Library · Crypto, word by word · DeFi
What is a funding rate?
A funding rate is a periodic payment between traders of perpetual futures that keeps the contract's price close to the coin's market price. When the contract trades above market, buyers (longs) pay sellers (shorts); when it trades below, shorts pay longs.
What it means for you
Funding is charged on your whole position size, not just your margin, and it repeats for as long as the position is open, on some platforms every hour. A rate that looks tiny per period can cost a large share of your margin over weeks. Check the current rate and its payment interval before opening a position.
How it works
The rate has two parts: a premium measuring how far the contract trades from the spot (oracle) price, and a small interest component. On one large venue the rate is computed as an 8-hour figure, paid every hour at one-eighth of it, and capped at 4% per hour. The payment is position size × oracle price × funding rate, so it scales with your whole position, not your margin. When the contract trades above spot, the positive rate makes longs pay shorts, which rewards trades that push the price back toward spot.
An example
Say you hold a long position worth 20,000 with 2,000 margin, and funding is 0.01% per hour with longs paying. You pay 2 an hour, 48 a day and about 336 a week: close to 17% of your margin in one week, even if the price never moves.
Source: Hyperliquid docs: Funding · checked 4 October 2026
Related words
Educational content, not financial advice. Written by hand and checked against the source named above. Something wrong? Tell us and we reply within two business days.