Funding rates explained: who pays, how often, what it costs

A funding rate is a small payment that traders on perpetual futures make to each other at regular intervals. When funding is positive, people holding longs pay people holding shorts; when it's negative, shorts pay longs. It exists to keep the price of a perpetual contract, which never expires, close to the real spot price. On Hyperliquid funding is paid every hour; on Binance and Bybit it is every 8 hours on many markets and every 4 or 1 hour on others. You can see live funding across markets and exchanges on sasa's Data page.

Why perpetual futures need funding

A normal futures contract has an expiry date. On that date it settles at the spot price, so the two prices can't drift apart forever. A perpetual has no expiry, so it needs another way to stay anchored. Funding is that way.

If more traders want to be long than short, the perpetual's price drifts above spot. Funding turns positive, longs start paying shorts, and holding a long becomes more expensive. That pushes some longs to close and draws in shorts who get paid to hold, which pulls the price back toward spot. The opposite happens when shorts crowd in.

Who pays whom

• Positive funding: longs pay shorts. The market is leaning long.
• Negative funding: shorts pay longs. The market is leaning short.
• Near zero: roughly balanced.

The payment is based on your position size, not your margin. A $100K position at 10x leverage pays funding on $100K, even though you only put up $10K. The exchange doesn't keep the money; it moves it from one side to the other.

Hourly vs 8-hour funding

Hyperliquid settles funding every hour. Binance and Bybit settle every 8 hours on many markets, and every 4 or even 1 hour on others; each market shows its own interval. This is the main reason funding rates are confusing to compare: a rate of 0.01% looks the same on both screens but means very different things.

Say Binance shows 0.01% per 8 hours and Hyperliquid shows 0.00125% per hour. Over 8 hours, Hyperliquid's rate adds up to 0.00125% x 8 = 0.01%. They are the same cost. If Hyperliquid showed 0.01% per hour, it would be eight times more expensive.

How to annualize a funding rate

The fix is to convert every rate into a year's worth. Multiply the rate per period by the number of periods in a year:

• Hourly: rate x 24 x 365 = rate x 8,760. So 0.00125% an hour is about 10.95% a year.
• Every 8 hours: rate x 3 x 365 = rate x 1,095. So 0.01% per 8 hours is also about 10.95% a year.
• Every 4 hours: rate x 6 x 365 = rate x 2,190.

This is why sasa shows funding as a year's worth everywhere on the Data page. On Hyperliquid, about plus 10% a year is a normal baseline. A market at plus 60% a year is clearly crowded long; one at minus 30% a year is crowded short.

What it costs to hold a position

Say you hold a $50K long in a market where funding runs at 40% a year. That's $20K a year, or about $55 a day, paid to shorts while you hold. If the price goes nowhere for a month, you are down roughly $1,650 from funding alone. At 10x leverage, your margin is $5K, so a month of that funding eats about a third of it.

The other side of the coin: a short in that market receives the same payment. Every trader on sasa's trader pages shows funding so far on each position, which makes the cost visible. See the Hyperliquid whale tracker for how to read it.

What high positive or negative funding tells you

• High positive funding means traders are paying a lot to be long. Enthusiasm is high, and so is the risk of a long squeeze: a dip forces leveraged longs to sell, which deepens the dip.
• Deeply negative funding means traders are paying to be short. Pessimism is high, and a bounce can force shorts to buy back, which can turn into a short squeeze.
• Funding that rises while price stalls is a classic sign of crowding: more longs paying more, without the price following.

Funding is one of the four parts of sasa's Market Fear & Greed score for that reason. Combine it with open interest: high funding with rising open interest means new leveraged longs are piling in.

Using sasa's Funding section

On the Data page, Funding lists Hyperliquid funding as a year's worth for the 80 busiest markets, with two views: Longs pay most and Shorts pay most. A second table compares Hyperliquid with Binance and Bybit predicted funding for the same coins, sorted by the biggest gap. Large gaps are where traders look for funding rate arbitrage: long on the cheap venue, short on the expensive one, and collect the difference. That trade has its own risks, from fees to liquidation on one leg.

Two quick reads from that section. If one coin shows up at the top of Longs pay most at, say, 120% a year while its price has stalled, the long side is crowded and paying heavily to stay in. If the same coin sits at 120% on Hyperliquid but 20% on Binance, the gap itself is the story: Hyperliquid traders are far more bullish on it than traders elsewhere, and that kind of gap rarely lasts long.

If you trade perpetuals, including on sasa's Futures page, check funding before you open and while you hold. Leverage can lose your whole margin, and nothing here is financial advice.