Funding rate

A funding rate is not charged by the exchange but flows between longs and shorts under a standard formula: funding rate equals the premium index plus the clamped adjustment between the interest rate and that premium index, with a typical clamp of plus or minus 0.05 percent. The premium index measures how far the perpetual's price drifts from the reference price, while the interest-rate component is usually fixed at 0.01 percent per 8-hour period. When funding is positive, longs pay shorts because the perpetual trades at a premium to spot; when negative, shorts pay longs.

The mechanism matters because it is what keeps a derivative with no expiry tracking its underlying asset. For a trader, funding is a cost or income from holding a position open and is the basis of cash-and-carry strategies, where a long spot position is paired with a short perpetual to capture positive funding. Settlement cadence varies: most venues settle every 8 hours, while dYdX and Hyperliquid settle hourly.

Decentralized protocols that apply funding include dYdX, Hyperliquid, GMX, Aevo and Vertex. Hyperliquid computes an 8-hour rate but pays it hourly at one eighth of its value, using impact prices to calculate the premium index. In the European Union, perpetual futures on crypto-assets fall within the perimeter supervised by MiCA and national authorities, which conditions how they are offered to retail investors.