What is funding rate and predicted rate?

Funding rate and Predicted rate

At the "Contract Details" section, traders may check on the funding rate which has been fixed for next funding timestamp. When you move your cursor to the Funding rate, the Predicted rate will be shown and it indicates the predicted funding rate for the subsequent funding timestamp. It is not fixed and is updated every minute according to Interest Rate and Premium Index that will affect the calculation of funding rate until the end of the current funding interval.

Using an 8 hour funding time interval as example. Funding rate calculated between 00:00 UTC-08:00 UTC will be exchanged at 16:00 UTC; Funding rate calculated between 08:00 UTC-16:00 UTC will be exchanged at 00:00 UTC; Funding rate calculated between 16:00 UTC- 00:00 UTC will be exchanged at 08:00 UTC.  

Exception: For CELOUSDT, RVNUSDT, KLAYUSDT, SCUSDT and XEMUSDT Perpetual Contracts, the displayed funding rate will be used to calculate the funding fee immediately should you hold the position beyond the funding timestamp.
Taking the above as an example, funding rate calculated between 00:00 UTC - 08:00 UTC will be used to derive the funding fee at 08:00 UTC instead of 16:00 UTC. 

Funding rate consists of two parts: Interest Rate and Premium Index.

Funding Rate Calculation

Bybit calculates the Premium Index (P) and Interest Rate (I) every minute and then performs an N*-Hour Time-Weighted-Average-Price (TWAP) over the series of minute rates.

The Funding Rate is next calculated with the N*-Hour Interest Rate Component and the N*-Hour Premium / Discount Component. A +/-0.05% dampener is added.

$$\text{Premium Index (P)} = {\text{Max(0, Impact Bid Price - Mark Price) - Max(0, Mark Price - Impact Ask Price)}\over\text{Index Price}}+{\text{Funding Rate of Current Interval}*{\text{Time Until Next Funding}\over\text{Funding Interval}}}$$

Funding Rate (F) = Premium Index (P) + clamp(Interest Rate (I) - Premium Index (P), 0.05%, -0.05%)

Hence, if (I - P) is within +/-0.05% then F = P + (I - P) = I. In other words, the Funding Rate will equal the Interest Rate.

This calculated Funding Rate is then applied to a trader’s Position Value to determine the Funding Fee to be paid or received at the Funding Timestamp.

*N= Funding Time interval, If funding occurs once every 8 hours, N=8. And if funding occurs once every 1 hour N=1

Interest Rate (I)

Every contract traded on Bybit comprises of a Base currency, such as BTC, and a Quote currency, such as USD. The Interest Rate is a function of the interest rates between these two currencies. For BTCUSD, it is the difference between the borrowing costs of BTC and USD. On Bybit’s website, (.BTCBON) BTC lending rate can be found in the Index section under the 'Contracts' tab.
$$\text{Interest Rate(I)} = {\text{Price Interest Rate Index - Base Rate Index}\over\text{Fund Rate Interval}}$$

• Interest Quote Index = The Interest Rate for borrowing the Quote currency
• Interest Base Index = The Interest Rate for borrowing the Base currency
• Funding Interval = 24/Funding Time interval = 24/8=3 ( Assuming that funding occurs once every 8 hours)

Interest Quote Index = 0.06%, Interest Base Index = 0.03%

Formula: The Interest Rate = (0.06%-0.03%)/funding interval=(0.06%-0.03%)/3 = 0.01%. ( Assuming that funding occurs once every 8 hours)

Premium Index (P)

Perpetual contracts may trade at a premium or discount from the Mark Price. In this situation, a Premium Index will be used to raise or lower the next Funding Rate to be level consistent with where the contract is trading. On Bybit’s website, history records of Premium Indexes (.BTCUSDPI; Premium Index) can be found at the Index section under the 'Contracts' tab.
$$\text{Premium Index (P)} = {\text{Max(0, Impact Bid Price - Mark Price) - Max(0, Mark Price - Impact Ask Price)}\over\text{Index Price}}+{\text{Funding Rate of Current Interval}*{\text{Time Until Next Funding}\over\text{Funding Interval}}}$$
$$\text{Funding Rate (F)}= \text{Premium index (P) + clamp (Interest rate (I) - Premium index (P), 0.05%, -0.05%)}$$

Impact Bid Price = The average fill price to execute the Impact Margin Notional on the Bid side
Impact Ask Price = The average fill price to execute the Impact Margin Notional on the Ask side

Impact Margin Notional is the notion available to trade with certain amount of margin and is used to determine how deep in the order book to measure either the Impact Bid or Ask Price.

For Inverse Perpetual Contract, it is 2 BTC/30 ETH/20,000 EOS/100,000 XRP/ 3,000 DOT/ 8,000 BIT/12,000 ADA/150 SOL/3,000 MANA/100 LTC. 

**For USDT Contract, please refer to table below.

Funding Rate Limit

*The IM% Base rate  and MM% Base rate are according to the base Risk Limit Tier of the respective trading pair. For more information, please refer to Risk Limit (USDT Contract).