Funding Carry (Cross-Sectional, Hyperliquid)

How it works

Perpetual funding is a crowding fee: when longs are over-leveraged they pay shorts to hold the position, and when shorts are crowded the payment flips. This strategy collects that fee. Each day it ranks the top-100 Hyperliquid perpetuals by funding rate, shorts the names paying the richest funding and longs the names paying negative funding, then standardizes the signal across all names so the book is balanced dollar-for-dollar long and short at 1x gross. The published top100_launch preset retains its name but explicitly excludes PURR, leaving 99 resolved members so the advertised window uses only authoritative coverage. It rides the funding spread rather than the market's direction. A 10-bar smoothing calms the signal and a 15% drift buffer holds turnover down.

When it works best

Crowded, over-leveraged markets where funding is actually being paid and the spreads between names are wide — most of the 2024-2026 window. Because the book is balanced long and short, the return comes from the funding gap rather than market direction. Over 2024-08-15 to 2026-09-29 the rerun default returned +47.1% with a Sharpe of 1.34 and a maximum drawdown of −10.5%, net of fees, slippage, and funding.

When it struggles

When funding compresses toward zero there is little left to collect. It also loses when crowded shorts squeeze — the negative-funding names it is long get sold off while the high-funding names it is short keep running. The price side of the book is only mildly positive on its own; funding is what carries the result. The default placed 17,692 trades in 3,217 positions over the window, and the funding collected more than covers the fees.