What is a funding rate? How perpetual funding is actually built

CoTrading editorial team 2026-09-23

Figures on this page are as of 2026-09. Fees, limits and margin tiers change — check the venue's own docs.

A funding rate is the periodic rate at which the long and short sides of a perpetual contract pay each other, set by how far the contract has been trading from its index, so that holding the crowded side costs money and the contract is pulled back towards spot.

This page is for anyone who trades perpetuals, or builds on them, and wants to know where the number comes from rather than only what it costs. It covers the structure that Binance, Bybit, OKX and Hyperliquid share, the three places they differ — how often funding settles, how far it may move, and which price turns a position into notional — and what code has to read live instead of assuming. The arithmetic of a single payment is in how to calculate funding payments; what a rate means over a year is in annualised funding cost.

Why this matters now

The rate is published as one small percentage, but three venue decisions sit behind it, and all three vary:

Interval. Since 2025-05-02 08:00 UTC, a Binance USDⓈ-M perpetual whose previous settlement hit the funding cap or floor moves to hourly settlement. OKX steps a capped contract from 8 hours to 4, 2 and then 1. Bybit sets the interval per contract. Hyperliquid pays every hour.
Bounds. Each venue caps the rate, and the caps are adjusted.
Reference price. Three of the four charge funding on mark-price notional; Hyperliquid uses its oracle price.

A bot that hard-codes “three settlements a day” can be wrong on any of these venues and is always wrong on Hyperliquid.

How it actually works

The four venues share one skeleton.

Measure the premium. The premium index compares the contract’s book with its reference price:
```
premium = [max(0, impact bid − index) − max(0, index − impact ask)] ÷ index
```
Hyperliquid uses its oracle price in the index’s place. Impact bid and ask are the average fill prices for executing a set notional into the book, not the top of book — so a thin book shows a larger premium than the best bid and ask suggest. When the book straddles the index, both terms are zero.
Average it over the period. Binance samples every 5 seconds and time-weights the result. Bybit takes a per-minute premium and weights it linearly towards settlement — weight 1, 2, …, N — so later minutes count more. OKX uses a time-weighted moving average over the settlement interval. Hyperliquid samples at a fixed interval and averages over the hour.
Add a clamped interest term.
```
F = P + clamp(I − P, lower band, upper band)
```
When the average premium P is within the band of the interest rate I, the clamp passes the difference straight through and F equals I. In a quiet market the rate therefore sits at the interest baseline, not at zero. When the premium runs far away, the clamp saturates and the premium dominates. Hyperliquid describes its interest component as fixed and paid to shorts.
Scale it to the interval. Binance and OKX divide by 8 ÷ N, where N is the interval in hours. Bybit scales the interest term by interval instead. Hyperliquid computes an 8-hour rate and pays one-eighth of it every hour.
Cap it. Binance publishes caps and floors, with per-symbol adjustments. Bybit sets its limits at ±min((IMR − MMR) × coefficient, MMR) using the margin rates of the symbol’s lowest risk-limit tier, which ties the cap to the margin schedule. OKX exposes maxFundingRate and minFundingRate and says they may be adjusted in real time. Hyperliquid’s hourly cap is the same for every asset and, in its own words, much less aggressive than CEX caps.
Settle between traders. payment = position notional × rate. A positive rate means longs pay shorts; negative, the reverse. All four describe funding as exchanged between users — Binance does not take a cut, OKX charges no service fee on it, Hyperliquid collects no fees on it, and Bybit exchanges it directly between traders.

The interest baselines, clamp bands, cap values and coefficients are all published on each venue’s funding page and change, so none is quoted here.

Where the four venues differ

Venue	Default interval	When it changes	Notional priced at	Where to read the live interval
Binance USDⓈ-M	8h (00:00, 08:00, 16:00 UTC)	Hourly after a settlement hits the cap or floor; reverts to 4h after a run of low rates. Binance may also set other intervals.	Mark price	`GET /fapi/v1/fundingInfo` (`fundingIntervalHours`, adjusted symbols only); `nextFundingTime` in `GET /fapi/v1/premiumIndex`
Bybit linear	Per contract; the 8h case settles 00:00, 08:00, 16:00 UTC	Hourly if the rate hits its limit at settlement; changes without separate announcement	Mark price	`fundingInterval` (minutes) in `GET /v5/market/instruments-info`; `fundingIntervalHour` in tickers
OKX SWAP	8h unless the contract specifies 1, 2 or 4h	Steps one level shorter when capped; reverts when OKX’s stated condition holds	Mark price	Difference between `fundingTime` and `nextFundingTime` in `GET /api/v5/public/funding-rate`
Hyperliquid	Every hour, at one-eighth of an 8h rate	Does not depend on the asset	Oracle price	Fixed by design

Note the units: Binance reports hours, Bybit’s instruments field reports minutes. Mixing them up is a factor-of-60 error.

The price column is the one people skip. On Binance, Bybit and OKX the payment is position size times the mark price at settlement. Hyperliquid’s docs say the spot oracle price converts size to notional, “not the mark price”. On a quiet day the difference is small; for a reconciliation that should match to the cent it is not.

Funding rate vs the things it gets confused with

Not a fee. The venue does not keep it. Your trading fees and your funding are separate lines, and a funding payment you receive is someone else’s payment, not a rebate.

Not the premium. The premium index is the input. The rate is the premium after averaging, the interest adjustment, the interval scaling and the cap. A large momentary premium does not become a large rate unless it persists for the averaging window and the cap allows it.

Predicted vs settled. Venues display a rate for the upcoming settlement that moves until settlement happens. OKX documents fundingRate as the predicted rate for the next settlement, with the settled figure in settFundingRate, and says the rate applied is the one calculated in the minute before settlement. Binance returns lastFundingRate. Reconcile against settled rates only.

Not basis. A dated future carries its cost in a price gap fixed at entry; a perpetual carries it in funding that accrues at rates not yet known — see perpetuals vs dated futures and what is basis.

Where the boundary should sit

Read the interval per contract, and re-read it. On Binance, Bybit and OKX it can change after a capped settlement. Cache it until the next settlement, not until the next deploy.
Use the venue’s notional price. Mark on three venues, oracle on Hyperliquid. The venue calculators for Binance Futures, Bybit, OKX and Hyperliquid apply the right one.
Do not hard-code caps. Read Binance’s adjusted caps from fundingInfo, Bybit’s upperFundingRate and lowerFundingRate from instruments-info, and OKX’s maxFundingRate and minFundingRate.
Do not trade the settlement second. Only positions open at the funding timestamp pay or receive, and Bybit says opening or closing within about five seconds of it does not guarantee inclusion or exclusion.
Know where it is debited. Binance deducts from available balance in the futures account. Bybit takes it from available balance and, if that is insufficient, from the position’s initial margin — which on an isolated position moves liquidation closer. OKX debits isolated margin for isolated positions and currency equity for cross. The effect on your liquidation level is worked through in why your liquidation price changes.

FAQ

What is a funding rate in simple terms?

It is a periodic payment between the holders of long and short positions on a perpetual contract. When the contract trades above its index the rate is usually positive and longs pay shorts; when it trades below, shorts pay longs. The payment makes the crowded side expensive to hold, which pulls the contract back towards spot.

Why did my contract’s funding interval change?

On several venues the interval shortens when funding hits its cap. Binance moves a capped USDⓈ-M perpetual to hourly settlement, OKX steps from 8 hours down to 4, 2 and 1, and Bybit switches capped contracts to hourly. Read the current interval from the venue’s API rather than assuming the 8-hour default.

Is funding charged on mark price or entry price?

Neither, universally. Binance, Bybit and OKX charge funding on position size times the mark price at settlement. Hyperliquid uses its oracle price instead, and its docs say explicitly that it is not the mark price. None of the four uses your entry price.

Does the exchange keep the funding payment?

No. All four venues describe funding as exchanged between traders: what longs pay, shorts receive, and the reverse. Binance says it takes no cut, OKX says it charges no service fee on funding, and Hyperliquid says no fees are collected on the payments.