How do Hyperliquid perpetual futures work?

Hyperliquid is a perpetual futures DEX — you trade perpetual contracts on-chain instead of spot tokens. Here's how the mechanics work:

What a perpetual is (the core idea) A perp is a derivative contract that tracks an underlying price (BTC, ETH, etc.) with no expiry date — you can hold it as long as you like, unlike a traditional futures contract. Two positions always exist per pair: someone longs (expects price up) and someone shorts (expects price down). Your PnL is just the difference between your entry price and the current mark price, times your position size.

How price stays anchored (funding rate) Because a perp never expires, there's nothing forcing it to converge to the spot price on its own. The funding rate is the mechanism that does it: every hour (typically), longs pay shorts or shorts pay longs depending on which side is more crowded. If the perp trades above spot, longs pay shorts to bring it back down; if below, shorts pay longs. This keeps the derivative price glued to the real market.

Leverage and liquidation You post margin (collateral, usually USDC on Hyperliquid) to open a position. Leverage multiplies your exposure — e.g. 10x leverage on $100 margin controls a $1,000 position. If the market moves against you far enough that your margin can no longer cover the position, you get liquidated (your position is closed and you lose most/all of that margin). Hyperliquid is known for high max leverage and competitive fees.

The Hyperliquid-specific part (why it's notable)

• It's an order-book DEX — matching happens off-chain on Hyperliquid's own high-speed chain for speed, then settles on-chain. This gives CEX-style liquidity and low latency without a centralized intermediary.
• Fees are low (maker rebates and tight taker fees) and there are no gas fees on trades.
• Collateral is held in a smart contract, so unlike a centralized exchange you're not trusting a company with your funds — though you are trusting the protocol's code, which is a different risk.

The trade-offs to be aware of: it's still a leveraged product, so position sizing and liquidation risk are the real dangers; and "your keys, but your code risk" — smart-contract and protocol risk replaces custody risk.

If useful, I can show you how Hyperliquid ranks against other perp DEXs right now by fee revenue and volume, or point you to where you'd actually open an account.

Is the perp pricing (funding, mark price) the part you want to dig into, or the exchange mechanics (margin, orders, withdrawal)?