Funding Rate
Also: perp funding · funding
Perpetual futures never expire, so exchanges run periodic funding payments between longs and shorts to tether the perp price to spot. The funding rate is both a cost and a signal.
A perpetual future has no expiry to force convergence with spot, so exchanges like Hyperliquid use a funding rate: at each interval, if the perp trades above spot, longs pay shorts; if below, shorts pay longs. That transfer nudges the perp back toward the index.
Two consequences matter for an agent. First, funding is a real, recurring cost of carry — a position that looks flat on price can bleed through funding if it’s on the crowded side. Second, funding is a crowd-positioning signal: persistently high positive funding means longs are paying up, a sign of leveraged one-sidedness that often precedes squeezes.
An agent trading Hyperliquid perps has to price funding into expected return, not just entry and exit. Strategies like funding-carry (collect funding on the paid side while hedging directional risk) live or die on getting this right, and a policy envelope can cap exposure when funding turns extreme.
- perps
- hyperliquid
- carry
Research source: rSwarm research library →