> For the complete documentation index, see [llms.txt](https://docs.zirodelta.com/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.zirodelta.com/hyperliquid/settlement-mechanics.md). # Settlement Mechanics This document explains exactly what happens at each Hyperliquid funding settlement. What is calculated, who pays whom, and how it affects the pool's position. You hold a wzdUSD share, not a Hyperliquid position of your own; the position that settles is the pool's, run by the Yield Engine. ## What a settlement is A funding settlement is a periodic cash transfer between the long and short sides of a perpetual market. It is automatic: no one signs or claims anything. At the exact settlement time, Hyperliquid's protocol calculates the payment and adjusts margin balances. On Hyperliquid, this happens every **60 minutes**, 24 times per day. ## The settlement calculation At each settlement: 1. Hyperliquid calculates the **funding rate** for the completed period. This is based on the time-weighted average premium between the perpetual mark price and the oracle (spot) price during that hour. 2. For every open perpetual position: * **Long positions** pay or receive: `position_size_usd × funding_rate` * **Short positions** receive or pay: `position_size_usd × funding_rate` 3. If the funding rate is **positive**: * Longs pay shorts * Long margin decreases by the payment amount * Short margin increases by the payment amount 4. If the funding rate is **negative**: * Shorts pay longs * Short margin decreases * Long margin increases The funding rate is applied to the **notional value** of the position. Not the margin. A $10,000 short position at a 0.01% hourly rate receives $1 per hour, regardless of how much margin is collateralizing that $10,000. ## Effect on delta-neutral positions In a delta-neutral position (short perp + long spot, the shape the Yield Engine runs), only the perp leg participates in funding settlement. The spot holding does not receive or pay funding. It is simply a price hedge. When positive funding settles: * The pool's short perp margin increases by `position_size × rate` * The pool's spot position is unaffected * Net result: the funding payment accrues to the pool every hour As that funding compounds it lifts the value of the pool, which is the value of your wzdUSD share. (This is the Hyperliquid funding cash flow, not the wzdUSD reward itself.) This is the fundamental mechanism behind the Yield Engine's delta-neutral funding capture. The settlement credit is a cash flow, not contingent on price and not correlated with market direction. (Funding itself can turn negative; see [Delta-Neutral Explained](/the-zirodelta-financial-engine/delta-neutral-explained.md).) ## Timing Hyperliquid settlements occur at the top of every hour: 00:00, 01:00, 02:00... UTC (verify current settlement times in the Hyperliquid UI, as UTC alignment may vary). The Hyperliquid UI shows a countdown to the next settlement. The funding rate displayed is the predicted rate for the upcoming settlement period; the actual settled rate may differ slightly based on the final hour's average premium. ## Predicted vs. Settled rate Hyperliquid publishes a predicted funding rate in real time. This is an estimate of what the settlement rate will be based on the current premium. It updates continuously via WebSocket. The predicted rate is an estimate for the upcoming settlement. The settled rate, which is what the pool's position actually earns, is the final calculation at the close of the period. In practice, the settled rate closely tracks the predicted rate in normal market conditions. Significant divergence can occur if the mark price moves sharply in the last few minutes of the settlement period. ## What happens to the position at settlement The pool's position is not closed or modified at settlement. Settlement is purely a cash flow event. Margin is adjusted, and the position continues unchanged. The pool keeps holding its short perp (and long spot) and captures the next settlement one hour later. The position accumulates yield over time through repeated hourly settlements. The pool's settlement history is public on the transparency page, so the yield it has captured is verifiable rather than taken on trust. > **See also:** [Funding Rates on Hyperliquid](/hyperliquid/funding-rates.md) · [Delta-Neutral Explained](/the-zirodelta-financial-engine/delta-neutral-explained.md) --- # Agent Instructions This documentation is published with GitBook. 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