Funding

Hyperliquid funding rates explained

Funding is the mechanism that keeps a contract with no expiry tethered to spot. It is also a running cost or income on every open position, and on a leveraged book held for weeks it is not a rounding error.

In short

Hyperliquid funding is peer-to-peer, with no protocol cut. The formula applies to an 8-hour rate but payment happens every hour at one eighth of it. The interest component is fixed at 0.01% per 8 hours — 0.00125% per hour, about 11.6% APR paid to shorts — plus a premium sampled every 5 seconds and averaged over the hour. Funding is capped at 4% per hour and the payment is position size times the oracle price times the rate.

At a glance

Hyperliquid funding parameters (from Hyperliquid docs)
Parameter	Value
Payment interval	Every hour
Formula basis	8-hour rate; one eighth paid each hour
Interest component	0.01% per 8h = 0.00125% per hour (~11.6% APR to shorts)
Premium sampling	Every 5 seconds, averaged over the hour
Clamp on interest term	±0.0005
Impact notional	20,000 USDC (BTC, ETH); 6,000 USDC (others)
Funding cap	4% per hour
Payment basis	position size × oracle price × funding rate
Protocol cut	None — funding is purely peer-to-peer

The two components

The published formula is: funding rate F = average premium index P + clamp(interest rate − P, −0.0005, 0.0005). The interest rate is fixed at 0.01% per 8 hours, representing the difference between the cost of borrowing dollars and the cost of borrowing spot crypto.

The premium is where market conditions enter: premium = impact price difference / oracle price, where the impact prices are the average execution prices for trading the asset's impact notional on each side of the book — 20,000 USDC for BTC and ETH, 6,000 USDC for other assets. If the perp trades above the oracle, longs pay shorts; below it, shorts pay longs.

Hourly payment, 8-hour arithmetic

The formula produces an 8-hour rate, but Hyperliquid settles every hour at one eighth of it. Compared with venues that settle every eight hours, this makes the cost of a position accrue smoothly and makes holding through a single funding spike less punitive.

The payment itself is position size times the oracle price times the funding rate. Note that the oracle price is used to convert size to notional, not the mark price.

The cap, and why it is high

Funding is capped at 4% per hour, which the documentation notes is much less aggressive capping than centralised counterparts, and the cap and interval do not vary by asset. A high ceiling means Hyperliquid lets funding do its job in a dislocated market rather than suppressing the signal.

For a trader, the practical reading is that extreme funding is possible and should be checked before holding a crowded position through a squeeze.

Funding in a copied basket

Mirrored positions pay or receive funding exactly as the leader's do, pro rata to your size. A leader whose edge comes from short-dated moves will show funding as a minor line; a leader who holds directional positions for days in a crowded market can see funding become a material share of outcome.

This is one of the costs that gets omitted from naive copy-trading return estimates, alongside exchange fees and tracking error.

Methodology

Scoring and replacement are documented in full on How it works and in the Docs (Policy v3). In short: the Elite basket is sticky, emergencies remove a leader immediately, and soft issues accrue at most one strike per UTC day with three strike-days triggering replacement. Read how it works or the documentation for the full table.

Questions

Frequently asked

How often is funding paid on Hyperliquid?

Every hour, at one eighth of the computed 8-hour rate. The payment is added to or subtracted from the position holder's balance at each interval.

What is the Hyperliquid funding rate cap?

4% per hour, applied uniformly across assets. The documentation notes this is deliberately less aggressive than typical centralised-exchange caps.

Does Hyperliquid take a cut of funding?

No. Funding is purely peer-to-peer between longs and shorts, with no fees collected on the payments.

Keep reading

Mark price and oraclesThe price indices that feed funding and margining.Trading feesThe other recurring cost on an active account.Funding rates in copy tradingHow funding shows up in mirrored returns.Live model performance7D and 30D score-weighted ROI estimates from public trader history.

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