The funding rate sets the regular payments between traders with long positions and traders with short positions in perpetual futuresPerpetual futures (perps)A derivative with no expiry date that tracks the price of a crypto. Regular payments keep it close to the market price, and it allows leverage.. The payments keep the contract's price close to the spot price of the crypto itself. They pass between users, not to the exchange.
How does it work?
- If the contract costs more than the crypto, the funding rate is positive. Those with long positions pay those with short positions. That makes long positions less attractive and pushes the contract's price down towards the market price.
- If the contract costs less than the crypto, the funding rate usually turns negative. Then those with short positions pay the others.
The rate changes all the time, depending on how far the contract's price strays from the market price. How often payments are made varies between exchanges. Every eight hours is common, but on Hyperliquid payments are made every hour.
An example
Say the funding rate is 0.01% per hour and you hold a long position worth US$10,000. You then pay US$1 an hour, or US$24 a day. That seems small, but if the rate stayed the same for a whole year, it would come to US$8,760, nearly 88% of the position.
The payments come out of your margin, so they can push the position closer to LiquidationLiquidationWhen a loan or leveraged position is closed automatically because the collateral or margin no longer covers the debt.. When many people want to buy with LeverageLeverageTrading with borrowed money, which multiplies both gains and losses and can wipe out your whole stake in a short time., the rate can also climb steeply.
Everything in Myntkaup Learn is written and regularly reviewed by the Myntkaup editorial team. It is for education and is not investment advice. Editorial policy. Updated 18 October 2026.