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About funding rates

Funding rates are a key feature of perpetual (perps) contracts. They are recurring payments exchanged between long and short traders, designed to keep the perps price aligned with the underlying spot price. Understanding how funding works is essential for advanced perps trading on HyperETH. Funding rates act as a peer-to-peer balancing mechanism between longs and shorts:
  • If the perps price is above spot, longs pay shorts
  • If the perps price is below spot, shorts pay longs
HyperETH does not collect any funding fees: they are transferred directly between traders.
These payments occur on an hourly basis, and whether you pay or receive funding depends on your position and the market imbalance at that time.

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Funding rate calculations

HyperETH’s funding rates are based on 2 components:
  • Interest rate
A fixed base rate (0.01% every 8 hours) that reflects the cost of holding crypto versus USD. This rate provides a baseline funding fee.
  • Premium index
Reflects the difference between the perps price and the spot index price (from a price oracle). If perps trade at a premium, funding is positive (longs pay shorts). If at a discount, funding is negative (shorts pay longs).
Final funding rate = Interest rate + Premium index
The funding payment is proportional to your position size and is settled every hour.
You are only charged or credited funding if your position is open at the funding timestamp.

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Viewing funding rates on HyperETH

You can monitor funding rates directly within the app for any perps market: Under each asset, the next funding payment countdown and rate will be visible. Frame 1801285955.png The funding payments that were paid or received can be viewed under the Funding History tab. Frame 1801285954.png

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The impact of funding rates

Funding rates impact your Profit & Loss (PnL) over time:
  • If you’re paying funding, it can gradually reduce your returns, even if the market price remains flat.
  • If you’re receiving funding, it can provide a steady source of passive yield.
For active or high-leverage traders, funding can become a significant factor in strategy profitability.