Funding Rate

Funding rates are a way to keep the price of a perp contract in line with the reference price of the asset.

Every hour, traders on one side of the market (either longs or shorts) pay a small fee to the other side — depending on whether the contract is trading above or below the oracle price of the asset. If the perp is priced higher than the oracle price, longs pay shorts. If it’s lower, shorts pay longs.

These payments go directly between traders – Ventuals doesn’t take a cut – and they help keep the market balanced by nudging prices back towards the reference price.

How is the funding rate calculated?

Ventuals applies a multiplier between 0.005 and 2.0 to Hyperliquid's funding rate formula. This funding rate multiplier is updated dynamically, based on the difference between the mark price and oracle price.

R is the mark-to-oracle difference expressed as a fraction of a 19% range. For example, a 9.5% mark-to-oracle difference corresponds to R = 0.095 / 0.19 = 0.5.

$$R = \frac{\text{mark-to-oracle difference}}{0.19}$$

The funding-rate multiplier is then computed as:

$$\text{Multiplier} = 0.005 \times \left(\frac{2}{0.005}\right)^{R^{6}}$$

As the mark-to-oracle difference increases, the funding multiplier increases exponentially from 0.005 to 2.0, incentivizing traders on the other side to step in. Starting at a ~19% mark-to-oracle deviation, the funding rate will reach the 4% max hourly rate allowed by Hyperliquid.