Billions of dollars in funding rates, a harvesting ground for arbitrageurs.

Written by: Basit

Translated by: Luffy, Foresight News

TL;DR

On just the Hyperliquid platform, traders pay funding rates amounting to millions of dollars annually;
The funding rate scale on Binance reaches hundreds of millions of dollars; as for other platforms? I cannot provide statistics at the moment;
The article contains several basic calculations; if you lack patience, feel free to skip them.

Funding rates were originally designed as a mechanism to encourage fair market trading, but have now become a harvesting ground for arbitrageurs.

What is the funding rate?

The funding rate is a fee paid periodically between traders (long and short sides) to balance the price difference between perpetual contract prices and spot prices.

For savvy players, this seemingly insignificant "change" can ultimately accumulate into millions of dollars in profit.

The core question of my research is: "How much do people earn through arbitraging funding rates?" In other words, "How much funding rate is paid in total among traders?"

To clarify this question, we first need to establish:

The "total cumulative funding rate paid" across all cryptocurrency perpetual contract markets is likely to be a shocking number, possibly reaching hundreds of millions of dollars;
The total funding rate for a specific exchange (such as Binance, Bybit, Hyperliquid, dYdX, etc.);
The total funding rate for a single asset (such as Ethereum perpetual contracts since launch or within a single year).

In short: there is currently no publicly available statistic for the "total cumulative funding rate across all cryptocurrency perpetual contracts."

Most exchanges and data service providers publish funding rates, open interest (OI), and historical data, but no one compiles every funding rate payment from all platforms into an official number.

However, in the following, I will:

Explain why there is no precise data for the "global total funding rate";
Share a "simple and correct method" for calculating the total funding rate;
Provide a "rough but transparent estimate range," including: global annual funding rate scale, reasonable estimate scale for Binance, and reasonable estimate scale for Hyperliquid.

Why is there no "cumulative funding rate total"?

Funding rates are peer-to-peer transfers between long and short traders, and the recording methods vary across centralized exchanges (CEX), decentralized exchanges (DEX), and on-chain systems.

Data service providers (like Coinglass) provide funding rates, open interest, and historical charts, but do not publish a "cumulative funding rate total covering all platforms and all markets." This is because funding rates occur between traders, not collected by the platform.

To calculate this total, we need to obtain time series data of "funding rate × open interest" from all relevant platforms and then make reasonable estimates.

This research uses Ethereum (ETH) perpetual contracts as an example for analysis.

Different platforms' Ethereum open interest data

Correct Calculation Method

For any perpetual contract market and any time window, the total funding rate can be calculated using the following formula:

Total funding rate for a certain period ≈ Σₜ [Funding rate (t) × Open interest (t) × Time interval (Δt) ]

Where:

Funding rate (t): The actual funding rate at a certain timestamp (t);
Open interest (t): The nominal open interest measured in USD;
Time interval (Δt): The funding rate settlement period (most centralized exchanges settle every 8 hours, i.e., three times a day).

Thus, we can calculate the precise total funding rate by integrating historical data series from platforms like CoinGlass.

My Estimates

To derive an "estimate range" rather than a "false single value," I adopted multiple sets of assumptions ranging from conservative to aggressive:

Commonly used choices:

Statistical time range: January 1, 2025, to August 27, 2025, totaling 239 days (calculated based on three settlements per day, totaling 717 settlement periods);
Funding rate settlement period: 8 hours per settlement (three times a day, applicable to Binance and most perpetual contract platforms);
Ethereum perpetual contract "total nominal open interest across the market": considered in three scenarios — $20 billion (low), $27.6 billion (medium, current actual data), $30 billion (high);
Ethereum "open interest-weighted average funding rate (every 8 hours)": using aggregated data of 0.000103 (i.e., 0.0103%).

As you can see, the actual open interest for all Ethereum perpetual contracts is $27.7 billion

When the funding rate is positive, it is paid from longs to shorts; when negative, it is paid from shorts to longs. Different assumptions yield different results from "conservative to aggressive."

Annual estimate formula (based on the above time window)

Annual total funding rate ≈ Average open interest × Average funding rate per cycle × (239 days × 3 times / day)

Estimated Results: Global Annual Funding Rate Scale (Rough Range)

Based on 239 days of data and the above formula:

Conservative scenario (open interest $20 billion, average rate 0.000103) → approximately $1.48 billion;
Medium scenario (open interest $27.6 billion, current actual data, average rate 0.000103) → approximately $2.04 billion;
Aggressive scenario (open interest $30 billion, average rate 0.000103) → approximately $2.2 billion.

Interpretation: Based on the medium scenario (current Ethereum open interest), the global annual funding rate total for cryptocurrency perpetual contracts is estimated to be at the lower limit of the billion-dollar level; during extreme periods of high leverage (funding rates soaring + high open interest), the annual total could reach the tens of billions of dollars.

Note: This is a "summary estimate value" rather than a "precise measurement value," as we used the "average assumption for the entire Ethereum market." (The above methods and examples can also be applied to other assets, such as Bitcoin, etc.)

Ethereum average funding rate chart

Estimated Results: Reasonable Scale for Binance (by Market Share)

Binance holds a significant market share in perpetual contract trading (this study estimates it at 17%, but you can adjust this ratio based on preference).

Substituting the 17% market share into the above global scale scenarios:

Conservative scenario → approximately $251 million over 239 days;
Medium scenario → approximately $347 million over 239 days;
Aggressive scenario → approximately $377 million over 239 days.

This number seems astonishing, but it is indeed reasonable.

Estimated Results: Scale for Hyperliquid

Hyperliquid's scale is much smaller than Binance (though I believe this situation may change soon).

Assuming Hyperliquid's Ethereum perpetual contract open interest accounts for about 5.3% of the global market (a very rough estimate), substituting into the global scale scenarios:

Conservative scenario (global $1.48 billion) → approximately $78.3 million over 239 days;
Medium scenario (global $2.04 billion) → approximately $108 million over 239 days;
Aggressive scenario (global $2.2 billion) → approximately $117.4 million over 239 days.

Core Summary: What Does This Mean for You?

There is currently no publicly available precise data for the "global cumulative funding rate total"; anyone claiming "cumulative funding rate total = X dollars" is based on aggregated data from multiple sources (and assumptions similar to this article);
The actual scale of the global annual funding rate may range between "lower limit of tens of billions" to "upper limit of tens of billions," depending on market conditions (based on reasonable assumptions in the medium scenario, approximately $2-5 billion/year);
The annual funding rate scale for Binance could reach the "hundreds of millions level" (depending on market share and funding rate fluctuations);
Hyperliquid's scale is relatively small, with an annual funding rate scale of about "millions to hundreds of millions level," depending on its average open interest.

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