Is Funding Charged on Margin or Notional?.

Funding is charged on notional, not on margin. The payment is calculated on the full value of your position, meaning your position size multiplied by the asset’s price, regardless of how much collateral you posted to hold it. Hyperliquid’s documentation gives the formula plainly: the funding payment equals position size times oracle price times the funding rate, with the spot oracle price used to value the position. Post $1,000 of margin on a $10,000 position and a 0.01 percent funding rate charges you on the $10,000.

This is the single most consequential detail in the mechanics, because it means leverage scales your funding cost invisibly. The rate looks tiny, 0.01 percent reads like nothing, and on your margin it would be nothing. On your notional at 10x leverage, that nothing is 0.1 percent of your actual capital per settlement. On an hourly venue, a sustained 0.01 percent rate against a 10x position bleeds roughly 2.4 percent of your margin per day. Traders who think of funding as a rounding error are usually thinking in margin terms while being charged in notional terms.

Run the worked example once and the intuition sticks. You hold a long worth $50,000 notional, backed by $5,000 of margin at 10x. Funding settles at positive 0.02 percent. Your payment is $50,000 times 0.0002, which is $10. As a share of notional that is invisible. As a share of your $5,000 margin it is 0.2 percent, gone in one settlement, and if the rate persists on an hourly clock that is roughly 4.8 percent of your margin per day, a burn rate that turns a flat market into a losing position. The same arithmetic in your favor is why the receiving side of an extreme rate can be genuinely lucrative, and why every funding strategy is really a leverage-adjusted funding strategy.

One precision detail worth knowing on venues that publish it: the price used to convert your position size into notional matters. Hyperliquid explicitly uses the spot oracle price rather than its own mark price for this conversion, which prevents the perp’s own dislocation from inflating or shrinking the payments during exactly the moments when mark and index disagree most. When you are evaluating any venue, the funding section of its docs will specify both the rate formula and the price used for the payment calculation, and both are worth confirming rather than assuming.

The practical rule that falls out of all this: always evaluate a funding rate against your margin at your leverage, not against notional, because that is the number you actually live with. The rate times your leverage is your true periodic cost or yield. This is also why headline APR projections on screeners mislead twice over, once by annualizing a snapshot and once by quoting return on margin without quoting the liquidation distance that comes with it, a double error I took apart in the 1,500% APR that doesn’t exist. For the basics underneath this page, start with who pays funding and how often it is paid.