# Funding Rate Formula Update

### *December 19, 2025 - Scaling Factor for Funding Rate Formula Update*

The default funding rate for crypto perps has remained unchanged at 0.01% / 8 hours since Bitmex first introduced the mechanism in 2016. Borrow rates for traditional asset classes (e.g., equities, commodities) are typically closer to SOFR + 1-2%. We reduced the funding rate across all XYZ markets by applying a scaling factor of 0.5 to Hyperliquid’s funding rate formula. This lowers baseline funding to \~5.5% annualized and results in less aggressive funding during weekend price discovery as well.

The specific formula is `Funding Rate XYZ (F) = 0.5 [Average Premium Index (P) + clamp (interest rate - Premium Index (P), -0.0005, 0.0005)]`.


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