Hyperliquid to Cut Funding Rate Cap From 4% to 0.5% an Hour
Hyperliquid's next network upgrade will cut the maximum hourly funding rate from 4% to 0.5% and double the limits on its HIP-4 outcome contracts.
Hyperliquid, the largest on-chain exchange for perpetual futures, will sharply lower the most traders can be charged in funding. Co-founder Jeff Yan said on the project's Discord on 27 September that the next network upgrade will cut the funding rate cap from 4% per hour to 0.5% per hour. The same upgrade doubles the limits on HIP-4 outcome contracts.
Key takeaways
- Maximum funding rate falls from 4% an hour to 0.5% an hour, an eightfold cut.
- Yan said the change follows user feedback and that the old cap was rarely reached.
- HIP-4 deployers can run 200 active contracts instead of 100, and 1,000 deployments a day instead of 500.
- No date for the upgrade has been given yet.
- Normal funding payments are far below either cap, so most traders will see no change day to day.
What a funding rate is
Perpetual futures never expire, so exchanges need a way to keep their price close to the spot price. They do it with funding: a small payment swapped between long and short traders at regular intervals. When the perp trades above spot, longs pay shorts. When it trades below, shorts pay longs. Hyperliquid settles funding every hour. Our explainer on what a funding rate is covers the maths.
The cap is a ceiling on that hourly payment. At 4% an hour, a trader on the wrong side of a crowded position could, in theory, lose 4% of their position size every hour, enough to wipe out a leveraged account in a single session. At 0.5% an hour, the worst case is much smaller, though still very expensive if it lasts.
Why Hyperliquid is changing it
Yan said the decision came from user feedback and from watching how traders actually behave. The 4% ceiling was almost never touched, so it offered little real protection while leaving room for extreme charges. It mattered most in thin markets, where a squeeze on a small token can send funding to the limit.
A lower cap limits how hard a squeeze can hit the losing side, and makes it easier to estimate what holding a position will cost. The trade-off is that funding may take longer to pull a mispriced perp back to spot in extreme moves.
HIP-4 limits double
The upgrade also changes HIP-4, Hyperliquid's framework for outcome contracts, which settle on the result of an event. Each deployer will be allowed 200 active contracts instead of 100, and up to 1,000 deployments a day instead of 500. Yan said this change came from developer requests.
What it means for traders in India
Hyperliquid is a decentralised exchange that you reach from a self-custody wallet. It is not registered with India's FIU, so there is no local recourse if something goes wrong, and profits are still taxable in India at 30%. If you trade perps anywhere, check the funding rate before opening a position and see our guide to how liquidation price works. For the rules and tax on futures at home, see crypto futures trading in India.
Hyperliquid's own token, HYPE, trades at about ₹8,443 ($87.97). Follow it on the HYPE price page.
FAQ
When will the new Hyperliquid funding cap start?
With the next network upgrade. Hyperliquid had not published a date when the change was announced on 27 September 2026.
Will my normal funding payments go down?
Usually not. Typical hourly funding is far below 0.5%, so the new cap only matters in extreme, one-sided markets.
Is Hyperliquid legal to use in India?
It is not registered with FIU-IND. Using unregistered platforms carries legal and practical risk, and any gains are still taxed in India.
This article is AI-assisted, educational and general in nature. It is not financial advice and never a guarantee of profit. Every trade is at your own risk on your own exchange. See our risk disclosure and editorial policy.
