> For the complete documentation index, see [llms.txt](https://docs.noon.capital/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.noon.capital/3.-the-yield-engine/yield-strategies/funding-rate-arbitrage-perps.md).

# Funding Rate Arbitrage (Perps)

## <mark style="color:$primary;">What is Funding Rate Arbitrage (Perps)</mark>

<mark style="color:purple;">**Noon**</mark> buys an asset in the spot market and shorts the same quantity through a perpetual contract. The two positions offset each other, so the strategy holds close to no directional exposure to the asset's price.

The return comes from funding. When funding is positive, perpetual longs pay shorts. <mark style="color:purple;">**Noon**</mark> collects that funding on the short leg while the spot leg cancels out the price risk.

The framework is asset and venue agnostic. <mark style="color:purple;">**Noon**</mark> deploys funding rate arbitrage wherever an asset and venue meet its standards for liquidity, funding, execution, custody and risk. Two deployments are currently active under this framework.

### $BTC / $ETH (on Binance)

The strategy holds BTC or ETH spot and shorts equivalent exposure through the corresponding COIN-M perpetual on Binance. Returns come from positive perpetual funding.

|              |                                                                                                                                                                           |
| ------------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| Provider     | Binance                                                                                                                                                                   |
| Custodian    | Ceffu                                                                                                                                                                     |
| Target yield | Variable. Over the 90 days ending 19 August 2026, BTC and ETH COIN-M funding averaged approximately 6.5% and 4.7% annualized respectively, before fees and custody costs. |

COIN-M perpetuals are margined and settled in the underlying asset. Gains and losses on the short closely offset changes in the spot position, which substantially reduces price-driven margin and liquidation risk.

Assets remain under institutional custody with Ceffu, whose MirrorX solution mirrors balances to Binance for trading. This reduces direct on-exchange custody exposure.

Both markets offer very high liquidity.\
\
On 19 August 2026, Binance BTCUSDT and ETHUSDT recorded approximately $709.7m and $357.4m of 24-hour spot volume, while the BTCUSD and ETHUSD COIN-M perpetuals recorded approximately $444.5m and $239.7m of notional volume with $1.08bn and $285.9m of open interest.

<mark style="color:purple;">**Noon**</mark> limits positions to a small fraction of daily volume.

### $HYPE (on Hyperliquid)

The strategy buys HYPE spot and shorts the same quantity through the HYPE/USDC perpetual on Hyperliquid. On Hyperliquid, funding settles every hour.

|              |                                                                               |
| ------------ | ----------------------------------------------------------------------------- |
| Venue        | Hyperliquid                                                                   |
| Target yield | Variable. Recent funding averaged approximately 9.84% annualized before fees. |

$HYPE was selected because it combines strong funding with deep liquidity.&#x20;

On 22 July 2026, $HYPE recorded approximately $72.7 million of spot volume, $407.8 million of perpetual volume and $1.33 billion of perpetual open interest.

### **Risk management**

<mark style="color:purple;">**Noon**</mark> monitors net delta and corrects position drift to keep spot and perpetual exposures matched. The trade is only held while expected funding remains positive after costs. Synchronized orders and strict delta limits reduce the temporary exposure created when one leg fills before the other.

## <mark style="color:purple;">Noon</mark> <mark style="color:$primary;">Deployment Analysis: Summary</mark>

### 1. BTC / ETH

<figure><img src="https://3816918787-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FL26rQzcNmiUZrCXkxkjS%2Fuploads%2FmDf1lgt09LZqX7alNTup%2Fimage.png?alt=media&amp;token=83213249-c7e5-413c-b2f1-2d8570827c85" alt=""><figcaption></figcaption></figure>

### 2. HYPE

<figure><img src="https://3816918787-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FL26rQzcNmiUZrCXkxkjS%2Fuploads%2FCAc5BNkKr4LOKOGUtLn2%2Fimage.png?alt=media&amp;token=1071133a-7809-42c5-8672-56071343b2cd" alt=""><figcaption></figcaption></figure>

## <mark style="color:$primary;">Return generation mechanism</mark>

The short position on the perpetural future leg (of $BTC, $ETH or $HYPE) generates the funding rate. The holders of long perp positions of these assets pay the holders of the shorts.&#x20;

## <mark style="color:$primary;">Documents</mark>

* A full risk assessment for the Funding Rate Arbitrage (Perps) trade for the $HYPE token can be found archived in <mark style="color:purple;">**Noon's**</mark> Governance Forum
* Primer: [**Funding Rate Arbitrage (Perps) Primer**](https://docs.google.com/document/d/1L0BEyEsTSiFL-hcR2OTgf79BrJN8flJnSqraCEzq2uU/edit?tab=t.0#heading=h.sx8lynp4801v)

**Note:** as Funding Rate Arbitrage (Perps) for the $BTC and $ETH tokens were among <mark style="color:purple;">**Noon**</mark>'s launch strategies, there was no governance vote to permit deployment into this strategy.