Hunter Biden Replies 'Hyperliquid' To Crypto Policy Question

What is Hyperliquid?

For starters, it's a platform becoming really popular for perp traders.

How do you trade perps?

It's not just long vs shorts - the funding rates matter.

Positive funding for perps (perpetual futures) means that the futures contract is trading at a higher price than the asset's current spot market value, making traders with long positions (buyers) regularly pay a fee to those with short positions (sellers).

This fee mechanism exists to align the derivatives price with the actual asset price. The dynamic carries several practical implications:

Market Sentiment: It indicates that the market is overwhelmingly bullish, with more demand and leveraged bets placed on the price going up than down.

The Cost of Holding: If you are holding a long position, positive funding acts as a recurring cost or "drag" on your trade, continuously chipping into your margin.

Incentive to Short: The fee is designed to penalize buyers and reward sellers to balance the market and push the price back down toward the spot price.

Strategy: Many traders use a "funding rate arbitrage" strategy (e.g., buying the asset on the spot market and shorting the perp) to collect the funding fee while remaining hedged against price movements.

Hope this helps any new traders.