Definition
A funding rate determines a periodic payment between long and short perpetual-futures positions to help keep the contract price near its reference price.
Who pays funding
When funding is positive, long positions generally pay short positions. When it is negative, short positions generally pay long positions. The direction can change as the difference between the perpetual contract and its reference market changes.
The payment is based on position size and the venue's funding calculation. Venues can use different formulas and intervals. Hyperliquid calculates funding from an interest component and a premium component and settles it hourly.
Why agents need the current rate
Funding changes the cost of keeping a position open. An agent evaluating a perpetual position should check the current and predicted rate, the payment interval and the possibility that the direction reverses. A high recent payment is not a promised return.
What it does not mean
Funding is a payment between opposing positions, not the trading venue's maker or taker fee. It can be a cost or a receipt and can change before the next interval.
Where this term fits
Questions about funding rate
- Who receives a positive funding payment?
- Long positions generally pay short positions when funding is positive. The direction reverses when the funding rate is negative.
- Is funding the same as a trading fee?
- No. Funding is transferred between long and short positions. Maker, taker and builder fees are separate charges tied to order execution.
- Can a funding rate change?
- Yes. It responds to the relationship between the perpetual contract and its reference price, so both its size and direction can change.
See these concepts in context
Review the Fensory MCP connection, tools and account controls.