FundingGapFunding rate glossary
Short definitions of the terms used on FundingGap and in perpetual futures trading in general.
- Perpetual futures (perps)
- Futures contracts with no expiry date. A funding rate keeps their price anchored to spot.
- Funding rate
- A periodic payment between longs and shorts, as a percentage of position value. Positive: longs pay shorts. Negative: shorts pay longs. The exchange itself does not receive it.
- Funding interval
- How often funding settles: usually every 8 hours, sometimes 4, 2 or 1 hour. Hyperliquid settles hourly. Rates must be normalised to the same interval before comparing.
- Settlement
- The moment funding is exchanged. Only positions open at that moment pay or receive it.
- Mark price
- The fair price an exchange uses for unrealised profit and liquidations, usually based on the index price plus a smoothed premium. It resists manipulation better than the last traded price.
- Index price
- A weighted average of the coin's spot price across several exchanges.
- How far the perpetual trades above or below the index price. A persistent premium pushes the funding rate up, a discount pushes it down.
- APR (annualised rate)
- A rate scaled to one year with simple interest: hourly rate × 24 × 365. Useful for comparing opportunities, not a forecast.
- Funding spread
- The difference between the funding rates of the short and the long exchange. It is what a funding arbitrage position earns before costs.
- Funding rate arbitrage
- Holding equal long and short positions in the same coin on two exchanges to collect the funding spread. See the full guide.
- Delta-neutral
- A position whose value does not change with small price moves, because long and short exposure cancel out.
- Cash-and-carry
- A related trade: long spot and short the perpetual on the same exchange, collecting positive funding. Funding rate arbitrage across exchanges uses two perpetuals instead.
- Basis
- The price difference between two instruments of the same coin, for example the perpetual on two exchanges. On FundingGap, entry basis is how much more expensive the short leg is than the long leg when opening.
- Notional value
- The full value of a position: size × price. Funding and fees are charged on notional, not on margin.
- Margin
- The collateral you post to open a leveraged position. Most exchanges use USDT; Hyperliquid uses USDC.
- Leverage
- Notional ÷ margin. Higher leverage needs less capital per position but moves the liquidation price closer.
- Cross vs isolated margin
- Isolated margin limits each position to its own margin. Cross margin lets positions share the account balance, which delays liquidation but puts the whole balance at risk.
- Liquidation
- Forced closing of a position when its losses use up the margin, minus maintenance margin. In a two-exchange hedge, each leg can be liquidated on its own.
- Maintenance margin
- The minimum margin a position must keep. Falling below it triggers liquidation.
- Auto-deleveraging (ADL)
- When an exchange's insurance fund cannot absorb a liquidation, it closes profitable opposing positions to cover it. It can unexpectedly close one leg of a hedge.
- Taker and maker fees
- A taker order fills immediately against the order book and pays the taker fee. A maker order rests on the book and pays the lower maker fee. FundingGap assumes taker fees.
- Bid/ask spread
- The gap between the best buy and sell price. Opening and closing a position with market orders crosses it once in total.
- Slippage
- Getting filled at a worse price than expected, because your order is larger than what is available at the best price.
- Order book depth
- How much can be traded near the current price. FundingGap's detail view estimates how large a position the book can take before slippage eats the profit.
- Open interest
- The total value of open positions in a contract. Rapid changes often come with large funding moves.
- 24-hour volume
- The value traded in the last 24 hours. FundingGap uses it as a liquidity filter, by default $1M per leg.
- Realised funding
- Funding that actually settled in the past, as opposed to the current rate, which only predicts the next payment.
- Stability badge
- FundingGap's summary of a pair's recent settled history: stable, mixed, spike or new. See how we calculate.