How funding rates are calculated, step by step

A funding rate is calculated from two parts: a premium that measures how far the perpetual trades from the spot index, and a small fixed interest part, joined by a clamp and limited by a cap. The payment is the position's value times that rate, settled every hour on Hyperliquid and, by default, every eight hours on Binance.

What funding is and why perpetual futures pay it is covered in Funding rates explained. This guide only does the arithmetic, using the formula Hyperliquid publishes in its documentation, and then shows where an 8-hour venue differs.

The formula in one line

Hyperliquid states the rate like this:

Funding rate (F) = average premium index (P) + clamp(interest rate − P, −0.05%, +0.05%)

The formula gives an 8-hour rate. The interest rate is fixed at 0.01% per 8 hours, and the premium is sampled every 5 seconds and averaged over the hour.¹ Everything else in this guide is a step through those three inputs: the premium, the interest part and the clamp, followed by the conversion into an hourly payment.

Step 1: the premium from impact prices

The premium compares the price at which a trade of a fixed size would fill on the perpetual's order book with the spot oracle price:

premium = impact_price_difference / oracle_price
impact_price_difference = max(impact_bid − oracle, 0) − max(oracle − impact_ask, 0)

The impact bid and impact ask are the average execution prices for a trade of a fixed notional, the impact notional, against the bids and against the asks. On Hyperliquid that notional is 20,000 USDC for BTC and ETH and 6,000 USDC for every other asset.²

Reading the second line tells you when the premium is not zero:

• Impact bid above the oracle: someone could hit the bids for the full impact size and still receive more than the spot price. The perpetual is rich, and the premium is positive.
• Impact ask below the oracle: a trade of the same size on the ask side would fill below spot. The perpetual is cheap, and the premium is negative.
• Oracle between the two: the book straddles the spot price and the premium is zero.

Using a fixed trade size rather than the best bid and ask means a small order at the top of the book does not set the premium on its own. The oracle side is the spot oracle that validators publish about every 3 seconds, a weighted median of spot prices from several exchanges.³

Builder-deployed markets (HIP-3) use a different premium, based on the midpoint of the two impact prices: premium = 0.5 × (impact_bid + impact_ask) / oracle − 1. Hyperliquid describes it as more responsive, so deployers can shape funding with a rate multiplier and their own interest rate.¹

Step 2: the interest part and the clamp

The interest part is fixed. On Hyperliquid it is 0.01% every 8 hours, which is 0.00125% every hour, or about 11.6% a year paid to shorts.¹ It stands for the difference between borrowing dollars and borrowing the crypto asset, set to the same value centralised exchanges use.

The clamp limits how far the interest part can pull the rate away from the premium: the difference interest − P is held between −0.05% and +0.05%. Working through the formula shows what that does. If the average premium lies between −0.04% and +0.06%, the clamp does not bind, the premium cancels out and the rate is exactly the interest rate of 0.01%. Only outside that band does the premium show up in the rate, as the premium plus or minus 0.05%.¹

This band is why so many markets show exactly the same rate in calm conditions. A perpetual that trades slightly rich or slightly cheap still pays the baseline. Funding moves away from it only when the book has drifted far enough from spot for the clamp to bind.

Step 3: from an 8-hour rate to an hourly payment

Hyperliquid pays funding every hour, at one eighth of the 8-hour rate computed for that hour. The rate is capped at 0.5% per hour, and the cap and the interval are the same for every asset.¹

The payment itself is:

payment = position_size × oracle_price × funding_rate

The position size is converted to dollars with the spot oracle price, not the mark price.¹ A positive rate means longs pay shorts; a negative rate means shorts pay longs. The money moves from one side to the other; no fee is taken from it.

How an 8-hour venue differs

Binance computes funding with the same structure: an average premium index from impact bid and impact ask prices against a price index, plus a clamp of ±0.05% around an interest rate of 0.01% per interval. The differences are in the schedule, the price used for the notional and the caps.⁴

Binance also writes the formula with a divisor, / (8 / N), where N is the funding interval in hours, so a contract that settles every 4 hours charges half of the 8-hour rate each time. It may change the interval and the caps during extreme volatility.⁴

The practical consequence: two venues can show the same "rate" while charging different amounts per day. An 8-hour rate on one venue and an hourly rate on another are only comparable once both are in the same unit.

Seeing the inputs on our pages

The funding page lists the current rate of every coin per venue, as a rate per hour and annualised (hourly rate × 24 × 365), and the rate each venue expects at its next settlement. That expected rate is explained on the predicted funding page: it is still moving until the funding time, because the premium is still being averaged.

The input to the premium is visible too. The premium / basis page shows how far the mark price trades from the index; a persistent positive premium usually comes with positive funding. Each coin's positioning tab puts funding next to open interest, so you can see whether a rate moved while positions were being opened or closed.

What the calculation does not tell you

• The next rate. The rate for an hour depends on the premium averaged over that hour, so it is only final when the hour ends.
• What a position will cost over a year. An annualised rate is a unit conversion of one interval. Rates are recomputed every hour.
• Who is right. A positive premium means the perpetual traded above spot over the window. It describes positioning and demand for leverage, not the next price move.
• A single cross-venue number. Intervals, caps and the price used for the notional differ by venue, so an average across venues mixes different formulas. Our OI-weighted funding weights each venue's annualised rate by its open interest, which shows what the average position pays, and keeps the per-venue rates next to it.