Stock Perpetuals Explained

A perpetual contract in four bullets

• Never expires. A traditional futures contract has a calendar expiration — March, June, September, December for index futures. A perpetual has none. You can hold a position as long as margin allows.
• Funding replaces the roll. Because there is no expiration to anchor price to the underlying, perpetuals use periodic funding payments between longs and shorts. On Hyperliquid, funding settles hourly.
• Anchored by oracle. The perp price is pulled toward an oracle reading of the underlying. Above oracle = longs pay shorts. Below oracle = shorts pay longs. The funding magnitude scales with the divergence.
• Always-on. On a 24/7 venue like Hyperliquid, the perpetual trades continuously even when the underlying market is closed — enabling weekend/overnight directional exposure to assets that historically had none.

Oracle pricing during and after market hours

During US market hours, the oracle reads the underlying stock or index price from major data sources (CTA/UTP/NMS feeds for equities, S&P or Nasdaq feeds for indices). The perp price tracks closely — small basis spreads emerge around news or large order flow, but funding pulls them back fast.

When the US market closes (4pm ET on weekdays, all weekend, US holidays), the oracle holds its last value. The perp price now floats on the Hyperliquid order book — bid and ask are set by traders, not the underlying exchange. This produces two predictable behaviors:

• Sustained drift between perp and last-cash-close can exceed 1-2% on news-active overnights (e.g. major earnings, Fed announcements, macro data).
• Funding rate rises sharply to drag the perp back toward oracle. Off-hours funding is often the highest funding of the week.

When the cash market reopens, the perp typically converges fast — within minutes for liquid names — as oracle reads the new spot price.

HIP-3 — what makes stock perps possible on Hyperliquid

HIP-3 (Hyperliquid Improvement Proposal 3) is the permissionless market-deployment standard adopted in November 2025. Before HIP-3, only the Hyperliquid core team could list new perp markets, which kept the exchange to crypto-native pairs. After HIP-3, any qualifying builder can deploy a new perpetual market that settles natively on Hyperliquid’s shared order book.

Two active builders deploy equity perps as of May 2026:

• TradeXYZ — USDC-settled, dominant equity-perp venue. Lists NVDA, TSLA, AAPL, MSFT, the S&P 500 (xyz:SP500, first officially licensed 24/7 S&P 500 perp), and the Nasdaq-100 (xyz:XYZ100, highest-OI HIP-3 product).
• Felix — USDH-settled. Currently lists TSLA as a dual-builder market alongside TradeXYZ. Different settlement asset, different fee structure, same underlying.

Each market lives on the same Hyperliquid order book infrastructure but with the builder’s chosen settlement asset, leverage cap, and fee structure. Different markets for the same underlying (e.g. TSLA on TradeXYZ vs Felix) are independent — different funding, different liquidity, different fees.

Funding mechanics — same as crypto perps, with one wrinkle

The funding model is identical to Hyperliquid’s crypto perpetuals: every hour, the protocol computes a small per-hour rate based on the divergence between perp and oracle, and longs/shorts pay each other accordingly. Annualized funding rates of 5-50% are routine on liquid names; over 100% APR can show up around earnings or large positioning shifts.

The wrinkle for stock perps: funding tends to spike higher around US market open and close. When the cash market is about to open after an off-hours drift, traders crowd one side of the perp and funding rates respond. Same pattern at close, when hedgers and arbitrageurs roll positions before the oracle stops updating.

For active strategies, the implication is clear: a perp trade held across an open/close transition carries a meaningful funding exposure that a same-asset spot trade does not. The PnL calculator breaks out funding cost explicitly — useful for sizing multi-hour holds.

Why off-hours pricing can drift

Three things drive overnight perp-vs-oracle drift:

1. News flow. Earnings hit after-hours, macro data drops overnight, Fed announcements come at 2pm ET. The perp prices the news in continuously; the underlying stock waits until 9:30am ET. Drift is the difference.
2. Liquidity asymmetry. Hyperliquid’s books are thinner than NYSE for single names, especially overnight. Large orders can push the perp 1-2% off the last cash close before finding the other side.
3. Funding lag. Funding adjusts hourly but takes a few cycles to drag a meaningful drift back. The perp price has to be off by enough to make the funding worth the carry.

None of this is a bug — it’s the price-discovery role a 24/7 perp plays for an asset with a 6.5-hour cash market. Traders looking for true overnight directional exposure use the drift; traders looking for tight tracking trade during regular hours when oracle is active and the book is deepest.