Bybit funding rate and fee: What they are and how they work

Perpetual contracts are one of the most popular financial instruments in the crypto market because they never expire. That convenience, however, comes with a recurring cost that many traders overlook. This cost, known as the funding fee, quietly compounds over time. Understanding how the funding fee works can turn a hidden expense into a strategic tool for managing your positions instead.

Key Takeaways:

• Peer-to-peer mechanism: The funding fee isn’t a Bybit charge — it’s a direct transfer between long and short position holders.

• Price alignment: The primary purpose of the funding rate is to keep Bybit's last traded price anchored to the global spot price.

• Automatic settlement: Fees are exchanged at fixed intervals, typically every eight hours — but only if you hold an open position at the exact settlement timestamp.

What is the funding rate?

The funding rate is a small periodic payment that keeps the price of perpetual contracts in line with the underlying spot market. It isn’t a Bybit fee, however. Instead, it’s a peer-to-peer transfer between traders: