How to Set Up a Bybit Connection with FundingRate

To get started, you'll need a verified Bybit account and an API key. Follow these steps to set everything up:

1. Verify Your Bybit Account

Ensure that your Bybit account is fully verified and configured to use a Unified Trading Account (UTA). The classic Bybit account is not supported by FundingRate.

If you are unsure whether your account is a UTA, check your Bybit dashboard. If Spot and Derivatives are listed separately, you are using the classic account. In this case, you'll need to upgrade to a UTA. Contact Bybit support for assistance with upgrading, or click the "Upgrade to UTA" button that may appear in your Bybit interface. This process typically takes only 2 minutes.

2. Create an API Key

To create an API key:

1. Log in to your Bybit account.
2. Navigate to Account -> API or go directly to Bybit API Management.
3. Ensure you have selected the necessary permissions for Spot and/or Futures trading, as required.
4. Select both Read and Write permissions so FundingRate can place orders on the exchange.

3. Add API Key to FundingRate

Once you've set up the API key, copy both the API Key and the Secret Key.

1. Go to the FundingRate dashboard.
2. Paste the copied keys into the relevant fields at the bottom of the dashboard.
3. Click Save to finalize your connection setup.

You're now ready to use FundingRate with Bybit!

Setting Up Notifications

FundingRate allows users to set up notifications to stay informed about specific events or changes. You can choose to receive alerts for a single selected symbol or for all available symbols. There are two notification options available:

1. Time-Based Notifications

With time-based notifications, you will receive updates at your chosen time intervals for your selected symbols. This allows you to monitor funding rates regularly without the need for manual checks.

2. Condition-Based Notifications

Condition-based notifications allow you to be alerted only when specific conditions occur. For example, you can set a notification to alert you when the funding rate becomes higher or lower than a predetermined value. Once the set threshold is reached, the notification will automatically turn off. To continue receiving alerts after the threshold is met, you will need to manually rearm the notification.

These notification options provide flexibility for keeping track of funding rate changes and staying updated based on your preferences.

Video Showcase

Please see video on how to set up notifications

Dashboard Sections

1. Analytics

The Analytics section provides a list of filtered symbols from Bybit. Only pairs that have both spot and futures contracts available are shown. This list includes the latest funding rate and allows sorting by the rate, as well as the next payout time. Additionally, the 24-hour trading volume for both futures and spot markets is displayed in USDT values.

Two dots next to each symbol indicate trade options:

• Green dot: Represents the ability to buy the spot, which is always available.
• Red dot: Represents the ability to short the spot, which may not be available for all symbols as not all Bybit symbols can be borrowed for margin trading.

Below the list, there are two additional sections:

• Left section: Displays historical funding rates for the selected symbol. It also shows the potential payout based on the capital input you provide in the top-right corner of the dashboard.
• Right section: Allows you to input different capital amounts and recalculate potential profits or losses. You can switch between positive and negative funding rates to assess different scenarios.

The positive view represents holding a short position on futures, while the negative view implies holding a long position on futures. Keep in mind that a long position on futures requires a short position on the spot market for hedging, which incurs an additional interest cost. The current interest rate for the chosen symbol will be shown in the right-hand table.

Other relevant statistics for the selected view include:

• Total payouts count: We request up to 600 records from the exchange. Some symbols have fewer records (if they are new), while others may have more, but we limit it to 600 for performance reasons.
• Total months: This figure is converted into a decimal to give you an idea of how many months' worth of data is being displayed.
• Positive/Negative rate payouts: Displays the number of payouts that were in your chosen view's favor.
• Positive/Negative rate percentage: Shows the potential percentage gain from holding the position during profitable payouts, without considering losses from non-profitable periods.
• In/Out commission: Displays the commission costs for entering and exiting the hedge, with an additional field showing the number of days it may take to break even from these costs based on initial payouts.
• Interest rates for negative payouts: When viewing negative side payouts, an additional field displays potential interest rates for holding a position.

2. Trading Section

The Trading section shows the order book for both spot and perpetual markets, providing insight into volatility. The right side contains the hedging controller, which will be explained in detail in another section. Both controllers are only available when the symbol supports both shorting and buying the spot market.

Hedging in FundingRate occurs in cycles, with each cycle treated as a separate activity. Users input the total amount they wish to hedge, which is then split and cycled. The activities tab allows users to view the details of the hedging process, including placed orders, order fills, and logs of the activities.

3. Account Section

The Account section shows all of your futures positions and coin assets in one place for easy management.

4. API Section

In the API section, you can input your API key and secret. For detailed instructions, please refer to the "How to Connect" section.

Working with Negative Rates

When working with negative rates, it is important to consider the following:

• Daily interest rates paid for borrowing your coin from the exchange
• In and out commissions
• The current negative funding rate

Let's imagine we are dealing with a symbol, such as RDNT (from the video example). The past three funding rate payouts for this symbol have been:

• 0.29%
• 0.75%
• 0.32%

For a 10,000 position on each side, this yields a profit of 136 USDT. However, holding this position will incur a daily interest rate of 0.84% to the exchange, which amounts to 84 USDT in costs, plus an additional 15 USDT for in and out commissions.

This leaves us with the following profit calculation:

136 - 84 - 15 = 37 USDT profit at the end of the day!

Important Notes on Shorting Coins

When first attempting to short coins, it might be not possible for your account. In order to enable short on spot please go to Bybit platform and attempt to short the desired coin manually first. That should give you a prompt which you will need to confirm after which the coin will automatically become "shortable" through our API".

Understanding Commissions on Bybit

On Bybit, commissions are automatically deducted from your account. These are calculated based on the specific percentage rates associated with your account. When we refer to "in and out" commissions, it means you will incur fees both when you open and close a position. For example, if you input a position of 10,000 USDT at the top of the dashboard, the system will calculate how much X USDT it will cost to open a spot position, and then how much X USDT it will cost to close it. The same principle applies for the futures market.

Now, imagine your commission rate is X for spot trades and Y for futures. In a positive rate scenario, here's what you'll be paying:

• Spot position buy commission – The fee charged when you open a spot position.
• Spot position sell commission – The fee charged when you close the spot position.
• Futures short commission – The fee for opening a short position in the futures market.
• Futures buy-back commission – The fee for buying back the futures position to close it.

Hedging Mechanism Overview - Fundingrate.net

This guide explains how the hedging mechanism works in Fundingrate.net.

Introduction

The hedging process on Fundingrate.net is designed to be straightforward. The system operates in small increments to manage both spot and futures positions efficiently.

Setting Up a Hedge

1. Inputting Values
When you enter a value (e.g., $100), the system opens two positions:

• $100 in a spot position.
• $100 in a short futures position.

2. Order Placement
Orders are placed as Fill or Kill (FOK) orders:

• For spot, a buy order is placed at the best ask price.
• If the order isn't filled, it will be canceled and retried after 2-3 seconds.
• Once the spot order is filled, a short futures order is placed at the best bid price, following the same process.

3. Incremental Execution
Orders are executed in $10 increments:

• The system places a $10 spot buy order and waits for it to be filled.
• Once filled, a $10 short futures order is placed to hedge the position.
• This cycle continues until the full $100 position is hedged.

Cycle Functionality

In the live version, after you input a value, the system displays the number of cycles required to complete the hedge. For example, if you enter $100, it may take 10 cycles of $10 increments to fully hedge.

Monitoring Your Activity

The system attempts to fill both spot and futures orders until they are fully executed. If an order is canceled, it will retry until it is successful. You can monitor each cycle as the system switches between spot and futures orders.

Handling Minimum Lot Sizes

The system attempts to get as close as possible to the target amount. However, due to minimum contract sizes, the hedge may not be exact. For instance, if you're hedging $100, the system will aim for $10 per cycle but may adjust based on the current price.

Unhedging a Position

If you want to reverse your hedge:

• Select the Unhedge option. This will execute the opposite trades (selling spot and buying futures).
• However, there’s a small limitation — any remainder smaller than the minimum lot size must be closed manually on Bybit.

Manual Adjustment for Small Positions

For small remaining positions that cannot be automatically hedged (due to being less than the minimum lot size), you need to:

• Close the remaining futures position on the Fundingrate.net platform.
• Manually close the small coin balance directly on Bybit.

This manual step ensures that even the smallest remainder is fully handled, completing the hedging process.