Funding rate: definition, formula and the cost of a perpetual

The funding rate is the payment that buyers (longs) and sellers (shorts) of a perpetual contract exchange at regular intervals, so that its price stays close to that of the spot market.

Why it exists

A classic futures contract has an expiry: on that day, its price meets that of its underlying asset. A perpetual has none, and funding pulls it back toward spot every period. When the perpetual trades above the spot index, funding is positive: longs pay shorts. When it trades below, funding is negative: shorts pay longs.

The formula

Binance and Hyperliquid compute the funding rate the same way:

Funding rate = average premium + clamp(interest rate - average premium, -0.05%, +0.05%)

The premium measures the gap between the perpetual's price and the spot index. Binance computes it from the buy and sell prices for a given size (impact bid and impact ask); Hyperliquid samples it every 5 seconds and averages it over the hour.
The interest rate is set at 0.01% per 8-hour period on both platforms, or 0.03% a day.
The clamp bounds the gap between the two at 0.05% either way.

As a result, as long as the premium stays within 0.05% of the interest rate, the funding rate is exactly that rate, 0.01% per 8 hours.

Intervals and caps

Rule	Binance	Hyperliquid
Payment	Every 8 hours by default (00:00, 08:00 and 16:00 UTC)	Every hour, one eighth of the 8-hour rate
Interest rate	0.01% per 8 hours	0.01% per 8 hours
Cap	2% either way, except for its major contracts	4% per hour
Position value	Mark price × size	Oracle price × size

In times of high volatility, Binance can switch a contract to a payment every hour; on a contract paid every N hours, it divides the rate by 8 ÷ N. Its major contracts, such as BTCUSDT, have a cap of their own, tied to their maintenance margin.

What it costs

Each payment is the position's value multiplied by the funding rate. At the interest rate alone, 0.01% per 8 hours, on a $10,000 position:

Period	Calculation	Result
8 hours	$10,000 × 0.01%	$1
1 day	$1 × 3	$3
30 days	$3 × 30	$90
1 year	$3 × 365	$1,095, or 10.95%

On Hyperliquid, the same rate is paid every hour in eighths: 0.00125% per hour, or $0.125 per hour on $10,000, and the same $3 a day.

Funding is computed on the position's value, not on your margin. At 10x leverage, $1,000 of margin carries a $10,000 position: the position's 10.95% a year is 109.5% of the margin.

For your position, with your rate and your holding period: the funding rate calculator. For the price at which it would be liquidated: the liquidation price calculator.

Reading a funding rate

Positive: longs pay. The perpetual trades above spot: demand from longs prevails.
Negative: shorts pay. The perpetual trades below spot.
Annualized: the current rate multiplied by the number of payments in a year. It does not tell you what you will pay over a year, since the rate changes every period.

How CentraFIN tracks your funding

CentraFIN reads your Hyperliquid account by its address, funding history included, along with your positions on Kraken Futures, OKX and Binance, in a single dashboard.

Sources

Frequently asked questions

Who receives the funding?

The traders on the other side: when it is positive, longs pay shorts; when it is negative, the reverse. Binance charges no fee on these payments.

Why is funding so often 0.01%?

Because the formula brings any premium that stays within 0.05% of the interest rate back to that rate, 0.01% per 8 hours.

Do I pay funding if I close before the hour?

Not on Binance: only a position open at the time of the payment pays or receives funding.

Why does Hyperliquid pay every hour?

Hyperliquid computes the same rate over 8 hours but pays it every hour, in eighths: the cost per day is the same, it just falls more often.