Hyperliquid Shorts Face 500% Penalty on Oil Trades

The Hyperliquid crypto exchange is currently offering traders up to 20x leverage on Brent oil, and despite its popularity, shorts are facing a hefty penalty of 500% annualized fees. This is due to an imbalance in funding rates between short and long positions, where longs are benefiting from hourly payouts as prices rise.

Oil has rallied 6% today alone, with prices increasing by 24% over the past 30 days amid escalating tensions in key trade routes. Year-to-date, oil is up 75%, largely due to supply disruptions caused by the ongoing Iran war that began in February.

The funding rates on Hyperliquid are not exchange fees but rather algorithmically determined hourly transfers between traders. These rates aim to bring the perpetual contract for oil back in line with the 'oracle' price, which is monitored and broadcasted onto blockchains by data providers.