A Matched Ledger With Different Collateral
Consider two hypothetical traders: one long and one short, each with exposure to 10,000 $SEI at an assumed funding settlement price of $1. Each therefore has $10,000 of notional exposure. The long starts with $4,000 in dollar collateral; the short starts with $8,000.
Assume both hold their positions through three eight-hour funding calculations. Prices and position sizes stay unchanged, with no trading fees, borrowing charges, deposits or withdrawals. Both remain adequately margined throughout. These balances are illustrative, not quoted OG.com margin requirements.
At an assumed **+0.10% per interval**, the long owes the short **$10 each interval**: $10,000 × 0.001. Cumulative funding is $10, then $20, then $30. After all three transfers settle, the long’s equity is **$3,970** and the short’s is **$8,030**.
In a separate scenario starting from the same original balances, an assumed **−0.10% per interval** reverses the payments. The short pays $30 cumulatively, leaving **$7,970**; the long receives $30, reaching **$4,030**.
The $30 transfer equals **0.75% of the long’s $4,000 starting collateral**, but **0.375% of the short’s $8,000**. Those percentages describe the funding-only change in starting equity, not the quoted funding rate or a total trading return. Equal exposure produces equal and opposite dollar transfers; the smaller collateral balance makes the same transfer twice as large in percentage terms.
The $SEI filing calculates funding over eight-hour intervals ending at 00:00, 08:00 and 16:00 UTC, using positions held at each interval’s end. Adjustments are paid or collected with variation margin—the cash adjustment for price changes—at twice-daily settlements, noon and 5 p.m. ET. The ledger shows cumulative obligations by calculation interval, not three immediate account debits.
Funding Is Not Trading Fees or Borrowing Interest
Funding transfers are distinct from fees charged for trading. Hyperliquid’s documentation likewise describes funding as peer-to-peer, with no fees collected on the payments. The Defiant’s report on Hyperliquid’s platform fees examines a different money flow.
Borrowing interest is a financing cost for funds or assets advanced by a lender, rather than a payment to the opposite side of a perpetual. For example, Kraken’s spot-margin disclosures separately charge for margin extended and for trading. The $SEI funding formula’s baseline labelled “Interest Rate” is a calculation component, not a separate loan bill.
Liquidation is different again: it closes a position rather than periodically transferring funding. OG.com’s $SEI filing requires dollar initial margin to be maintained and permits a margin call or liquidation if collateral falls below the applicable requirement. Paying funding reduces the equity available to support that requirement, even without an adverse price move.
