How Perpetual DEXs Work · Perpetual Contracts · 4/4
Perpetual Contracts — Quiz
Test your understanding of perpetual contracts, funding rates, and margin mechanics.
1. What mechanism keeps perpetual contract prices aligned with spot prices?
The funding rate is a periodic payment between longs and shorts. When the perp price is above spot, longs pay shorts (incentivizing selling). When below spot, shorts pay longs (incentivizing buying). This keeps the prices aligned without any expiry mechanism.
2. On Hyperliquid, why does funding usually show a small positive rate even when the perp trades almost exactly at the oracle price?
Hyperliquid's funding rate is the average premium plus clamp(interest rate − premium, −0.05%, +0.05%), with the interest rate fixed at 0.01% per 8 hours. When the premium is small, the result equals the interest rate, so longs pay shorts a small baseline (about 11.6% APR). Funding is peer-to-peer; the exchange collects no fee on it.
3. What is the key difference between cross margin and isolated margin?
In cross margin mode, your entire account balance acts as collateral for all positions — making liquidation less likely but putting your whole balance at risk. Isolated margin dedicates specific collateral to each position, limiting max loss but making individual positions easier to liquidate.
4. You open a 10x long BTC-PERP position worth $50,000 with $5,000 margin. The 8-hour funding rate is +0.02%. How much funding do you pay per day?
Funding is calculated on the position notional, not the margin. $50,000 x 0.02% = $10 per 8-hour period, or $30 per day. On Hyperliquid this is paid hourly at one-eighth of the 8-hour rate ($1.25 per hour), which adds up to the same $30 per day.