Hyperliquid Funding Rate Explained: Formula and Hourly Payments

The funding rate is the percentage applied at a funding event. The funding payment is the cash flow produced when that rate is applied to a particular position’s reference value. The same rate can produce different payments for different sizes and reference prices. Position direction determines which side pays and which receives. Hyperliquid describes funding as a transfer between longs and shorts and says it does not collect a separate protocol fee on the funding transfer.

An “annualized funding yield” is not a promised future income stream. It extends a current hourly rate over a longer period under an assumption that the rate continues. Funding can change with the price relationship and product rules. Actual account results also include execution fees, fills, collateral use, and liquidation risk. The general mechanics and venue differences are covered in the perpetual funding-rate guide.

Hyperliquid’s standard perpetual funding formula combines the average premium index, P, with a fixed interest component:

8-hour rate F = P + clamp(0.0001 − P, −0.0005, 0.0005)

The clamp(x, low, high) function limits x to the stated range. 0.0001 is 0.01%; 0.0005 is 0.05%. Divide the result of the eight-hour formula by eight to get the rate paid for one hour. Hourly settlement does not mean the full eight-hour rate is charged once in every hour.

If P is zero, F is 0.0001, or 0.01% over eight hours. The hourly rate is 0.0001 ÷ 8 = 0.0000125, or 0.00125%. This isolates the formula’s fixed interest component; it is not a claim that the live premium is zero or that a position will receive a particular amount. Read the official Hyperliquid funding rules for the formula and settlement interval together.

For the standard formula, the premium index measures the relationship between the perpetual market and the underlying spot oracle price. Impact bid and ask prices are average execution prices for trading the product’s specified impact notional against each side of the book.

impact price difference = max(impact bid − oracle price, 0) − max(oracle price − impact ask, 0)

premium = impact price difference ÷ oracle price

The two terms compare both sides of the book with the oracle. The result is not necessarily the last traded price minus a spot quote. Hyperliquid says it samples the premium every five seconds and averages it over an hour. That window helps explain why one momentary trade or quote does not by itself determine the entire hour’s funding rate.

The oracle is not simply one venue’s last price either. Hyperliquid’s documentation says validators compute it as a liquidity-weighted median of CEX spot prices. Impact prices and the spot oracle are separate inputs; mark price is a separate field used for other purposes. In the standard funding formula, the oracle price is used to form the premium. The difference between mark, index, and last trade is explained in mark price versus last price.

Assume a positive rate. If P is zero in the standard formula, the eight-hour rate is 0.01% and the hourly rate is 0.00125%. Suppose the position size is one BTC and the oracle price at the event is $10,000. The simple reference value is $10,000.

hourly payment magnitude = position size × oracle price × hourly funding rate

1 BTC × $10,000 × 0.0000125 = $0.125

With a positive rate, the long pays the short. Under this assumption the long’s debit is about 0.125 USDC and the short receives the same amount, before other account changes. This is a formula example, not a current-rate quote. Hyperliquid’s contract specifications describe its standard contracts as USDC-margined and USDT-denominated linear contracts. Do not assume that a price shown in USDT means every ledger entry is recorded in the same asset. Some instruments use different quote conventions, so verify the specific market’s contract specifications.

Now use a hypothetical premium P of 1% to show the premium adjustment. This intentionally extreme input demonstrates the formula; it is not a market observation or forecast.

F = 1% + clamp(0.01% − 1%, −0.05%, 0.05%)

F = 1% − 0.05% = 0.95% — the eight-hour rate.

hourly rate = 0.95% ÷ 8 = 0.11875% = 0.0011875

1 BTC × $10,000 × 0.0011875 = $11.875

At this positive rate, the long pays about 11.875 USDC per hour and the short receives it. The example shows how the clamp affects a premium much larger than the fixed interest component. A real calculation needs the premium average, the exact position size, the event’s oracle price, and the rule for that market. Hyperliquid also documents an hourly funding cap; a cap is not a typical rate or a forecast of future cost.

Hyperliquid states the funding payment formula as position size × oracle price × funding rate. The oracle price at the event converts the position size into its reference notional. Funding is not calculated with the mark price. Mark price serves other purposes, including unrealized P&L and liquidation risk. Using the wrong price field can mix two different account movements.

Consider a simple ledger for a one-hour long position. With a positive hourly rate of 0.00125%, a $10,000 event oracle price, and one BTC, the funding debit is 0.125 USDC. If the BTC price also rises and execution-based P&L is +20 USDC, those are not one “funding profit” number. Record +20 from price P&L, −0.125 from funding, and fees or other changes on separate lines. A short can receive positive funding and still lose more from an adverse price move.

Hyperliquid’s API documentation separates current asset contexts, historical funding rates, and a user’s funding history. A user-funding entry can include the event time, coin, signed position size, applied rate, and USDC amount. To reconcile what actually moved in an account, match the event timestamp and the usdc amount rather than relying only on a displayed estimate. The standard API example shows a positive szi long with a positive rate and a negative USDC account entry.

The predictedFundings query is a prediction for a future event and includes the next funding time; it is different from a settled payment already recorded in the account ledger. The API documentation says this predicted-rate query is supported only for the first perp DEX, so do not assume it covers every HIP-3 market. See Hyperliquid’s perpetual asset and funding API reference for field definitions and query scope.

The formula above describes standard spot-oracle-linked perpetuals. Hyperliquid documents a more responsive premium formula for HIP-3 builder-deployed perpetuals. It compares the average of impact bid and ask prices with the oracle, and the deployer can set a funding-rate multiplier and interest component. Do not insert a HIP-3 rate into the standard formula or assume the same premium always produces the same rate.

Hyperps also differ. Unlike a standard perpetual tied to an external spot or index oracle, this product type uses a moving average of its own mark price as the reference for funding. First identify whether a market is a standard spot-linked perp, a HIP-3 market, or a Hyperp. Hyperliquid’s Hyperps documentation describes its alternative reference and funding design. This guide does not treat the risk of the three market types as interchangeable.

If contract, collateral, and price units are unclear, even a correctly copied formula can be applied to the wrong ledger. The Hyperliquid contract specifications are the place to check product units, oracle currency, collateral, and account rules. For the broader distinction between payoff denomination and collateral, see linear versus inverse perpetual contracts.

Holding spot while shorting a similar perp can reduce directional exposure and may receive positive funding, but that does not create guaranteed arbitrage. Funding can reverse or shrink, and the spot-perp basis can move. Bid-ask spread, execution slippage, custody or transfer costs, and trading fees change the result. The short can also be liquidated because of basis moves or margin pressure while funding is being received.

Multiplying the current rate by a planned holding period hides an assumption that every future hourly rate will stay the same. The premium window, position size, and account state can all change. When comparing annualized rates across venues, match the settlement interval, rate convention, reference price, and product type. The perpetual trading-cost guide shows how to reconcile fills, fees, and funding without combining distinct cash flows.

1. Market and symbol: standard perp, HIP-3, or Hyperps
2. Rate period: eight-hour formula result or hourly applied rate
3. Payment direction: rate sign combined with the position side
4. Reference value: position size, event oracle price, and ledger asset
5. Timestamp: predicted next event versus the UTC time of a settled record
6. Price purpose: oracle and premium input versus mark-price risk calculation
7. Other cash flows: execution P&L, opening and closing fees, collateral changes, and funding

This recordkeeping method helps compare a rate or explain a past account movement. It is not a signal to trade or a recommendation to use Hyperliquid. Product documentation and account rules can change, so verify the current market specification and actual ledger before relying on a calculation.