Funding Rate

Definition

A perpetual future never expires, so exchanges use funding to keep its price tethered to spot. Every interval, one side pays the other: when the rate is positive, longs pay shorts; when it's negative, shorts pay longs. It settles straight to your wallet balance, completely separate from your price PnL.

On Bybit the interval is usually 8 hours — fixed at 00:00, 08:00 and 16:00 UTC (some alts settle every 4h). The fee is charged on your position's notional, not your margin, so as a share of the capital you actually posted, funding cost scales linearly with leverage.

Formula

Bybit only charges whole intervals you hold across a settlement: intervals held = floor(hold hours ÷ interval hours). Exit at 07:59 UTC and that block is free; hold to 08:01 and you pay it in full.

Worked example

Hold a $10,000 notional long for 72 hours at 0.01% per 8h interval: you cross 9 settlements, so funding = $10,000 × 0.0001 × 9 = $9.00 (0.09% of the position, ~11% annualized). Small per event — but a strategy that turns over 80+ cutoffs a month can hand a third of its gross straight back to funding.

Why it matters

• Bybit's 'Closed PnL' excludes funding while your wallet is net of it, so the two never reconcile unless you track funding separately (PerpLog assigns it per trade).
• Because funding is charged on notional, a 10× position pays 10× the funding-as-%-of-margin of a 1× position for the same view.
• Cutoff timing is binary — the same trade can cost $0 or a full interval depending on which side of the settlement clock you exit.
• A useful KPI is funding as a % of net PnL: above ~15% it's a real drag; above ~30% the strategy needs a redesign, not a tweak.

Related

• →Funding Cost Calculator
• →How Funding Fees Destroy Your Edge (guide)