What is a funding rate? A plain-English guide
Perpetual futures never expire. To keep their price close to the real (spot) price, exchanges make the two sides of the market pay each other a small fee every few hours. That fee is the funding rate.
Who pays whom
When more traders want to be long, the futures price drifts above spot. The funding rate turns positive and longs pay shorts. When shorts dominate, it turns negative and shorts pay longs. The payment pulls the futures price back toward spot.
How often, and how much
Many exchanges settle funding every 8 hours; Hyperliquid settles every hour. A rate of 0.01% per hour looks tiny, but it is paid 8,760 times a year: about 88% a year on the position size.
Why rates differ between exchanges
Each exchange has its own traders, its own demand and its own formula. The same coin can pay 40% a year on one exchange and 5% on another at the same moment. That gap is what funding-rate arbitrage collects.
Reading a funding rate
- Positive: longs pay shorts. Holding a short earns funding.
- Negative: shorts pay longs. Holding a long earns funding.
- Annualised (APR) numbers make exchanges with different schedules comparable.
- Rates change every period. A one-off spike matters less than a rate that stays high for days.
Rivemont shows the funding rate of every Hyperliquid market, refreshed every 5 minutes. See today's rates.