How hourly funding on Polymarket Perps works: who pays whom, the ±4% cap, and how funding changes the real cost of holding a position.
A perp never expires, so nothing forces its price to match the underlying asset. Funding is the correction mechanism: when the perp trades above the reference price, longs pay shorts; when below, shorts pay longs. The payment pushes traders to close the gap.
Funding on Polymarket Perps settles hourly and the hourly rate is capped at ±4%. In calm markets the rate is usually a small fraction of a percent; in one-sided markets it can pin at extremes, making a crowded position expensive to hold even when the direction is right.
Before holding overnight, check the current funding rate on the contract and multiply by your planned holding hours. A 0.1%/hour rate held for a week costs about 16.8% of notional — more than most entry fees by an order of magnitude. Funding is also a sentiment signal: extreme positive funding means the crowd is crowded long.
One balance for prediction markets and perps. Check the live contract, start at low leverage, and size small while you learn.
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