Funding

You pay or receive scheduled cash transfers between longs and shorts to hold a perp open. This transfer is funding. It keeps the contract near spot whether your directional bet is working or not.

◇ THE MECHANIC

Funding accrues on a fixed schedule. On Hyperliquid, the API rate is 1-hour. On CFTC-regulated venues like Kalshi perps, settlement is often every 8 hours. Same idea, different interval. Read the schedule before you hold over a weekend.

If funding is positive, longs pay shorts each interval. Long in a persistent positive regime and you bleed cash while price goes nowhere.

Primary source: Hyperliquid funding docs cover the exact schedule and formula.

◇ THE PURPOSE

Without funding, a perp would drift from the index. The transfer incentivizes arbitrageurs to short rich perps and long cheap ones. A classic basis trade harvests this spread. You are on one side of that transfer every interval.

◇ THE RISK

Retail traders focus on the chart. Funding compounds hourly. In a choppy, slightly-positive-funding market, you can lose a meaningful fraction of your margin without a large price move. The product is working as designed. After crashes, funding often inverts for days — see the LUNA contagion replay and the August 2024 yen-carry unwind for how negative carry tracks a cleared long book.

◇ WORKED EXAMPLE

Long $10k at 5× · +0.01%/h funding · 30 flat days

$720 paid = 36% of margin on a flat month

Input	Value
Notional	$10,000
Leverage	5× → margin $2,000
Funding rate	+0.01% per hour (longs pay)
Days flat	30 → 720 hourly intervals

Funding paid: $10,000 × 0.01% × 720 = $720

As a share of margin: $720 / $2,000 = 36%

Price did not move. Direction was neutral. You still paid $720 because you were long in a positive-funding regime.

You can be right on price and still lose money. Right on direction, lose on carry. Funding ran against you every hour.

Multiply by 24 × 365 for a rough APR only if the rate held. It does not. Rates flip with positioning and volatility. Use the calculator on this site with live illustrative data, then override manually for stress cases.

◇ RECAP

• What are you holding? Price exposure with a recurring funding obligation on a fixed schedule.
• What do you pay or receive? Cash transfers between longs and shorts. The sign depends on positioning and whether the perp trades rich or cheap to spot.
• What forces you out? Liquidation from margin, not funding directly (Lesson 04: funding erodes margin until equity hits the maintenance floor).
• When is a perp wrong? Sideways markets with hostile funding (Lesson 06: when a flat hold would bleed your thesis).