Why perpetuals need funding
A normal futures contract has an expiry date, and on that date its price has to meet the spot price. A perpetual future never expires, so something else has to stop it from drifting away from spot. That something is the funding rate: a regular payment between traders who are long and traders who are short.
When the perpetual trades above the spot index, the rate is positive and longs pay shorts. Holding a long becomes more expensive and holding a short earns income, which pulls the perp price back down. When the perp trades below spot, the rate turns negative and shorts pay longs. The exchange does not keep the payment; it only passes it from one side to the other.
How the rate is calculated
Binance, Bybit and Hyperliquid use the same basic formula: funding = average premium + clamp(interest rate − premium, −0.05%, +0.05%).
- The premium measures how far the perp's order book sits above or below the spot index. Binance uses the impact bid and ask prices (where a set order size would fill); Hyperliquid samples its premium every 5 seconds and averages it over the hour.
- The interest rate is a fixed 0.01% per 8 hours on all three venues (Binance describes it as 0.03% a day).
- The clamp means that while the premium stays within 0.05% of the interest rate, funding settles at exactly 0.01% per 8 hours. That is why so many coins show that exact number in calm markets: it is the baseline, not a sign of bullishness.
A position pays or receives position value × funding rate at each funding time. A $10,000 long at +0.01% pays $1; at +0.1% it pays $10, every interval.
How often it is paid
Binance's default is every 8 hours, at 00:00, 08:00 and 16:00 UTC, but many contracts settle every 4 hours, and Binance can switch a contract to hourly settlement in extreme markets. Bybit also defaults to 8 hours with shorter intervals on some contracts. Hyperliquid pays every hour, at one eighth of the 8-hour rate, and caps funding at 4% per hour.
Because intervals differ, comparing raw numbers across exchanges is misleading. This site converts every rate to its 8-hour equivalent so the funding rates table compares like with like. The live box above does the same: a Hyperliquid rate shown as 0.0100% per 8 hours means 0.00125% was paid each hour.
From funding rate to APR
To see what a rate costs over time, annualise it: multiply the 8-hour rate by 3 (payments a day) and by 365. The baseline 0.01% per 8 hours is about 11% a year. A rate of 0.1% per 8 hours is about 110% a year, which is expensive enough that longs rarely hold it for long. The highest funding rates and negative funding rates pages show APR next to each rate.
What traders read from it
Crowding. Funding tells you which side is paying to hold its position. Very positive funding means longs are crowded and willing to pay a lot; very negative funding means the same for shorts. Crowded positions are the ones most at risk of a squeeze or a liquidation cascade.
Context with open interest. High funding with rising open interest is leverage still building. High funding with falling OI is longs leaving.
Carry. Some traders hold spot and short the perp to collect positive funding while staying market-neutral. Others take the high-rate side on one exchange and the low-rate side on another. The funding arbitrage page lists the widest gaps between venues. These trades carry real costs: trading fees, the risk that the rate flips, and the risk of liquidation on the short leg if margin runs low.
Things that trip people up
- The rate shown before a funding time is usually a prediction that keeps changing until settlement.
- You only pay or receive funding if you hold a position at the funding timestamp.
- Funding is charged on the full position value, not on your margin, so at 10× leverage a 0.1% payment is 1% of your margin.
For live numbers per exchange, see the BTC funding rate page or Hyperliquid funding rates.
Checked against the exchanges' own documentation on 28 September 2026: Binance: introduction to funding rates · Bybit: introduction to funding rate · Hyperliquid docs: funding. Not financial advice.