Why funding rates differ between exchanges
Each exchange runs a completely independent perpetual contract. The funding rate reflects the imbalance between long and short open interest on that exchange's order book alone. If Bybit's retail base is heavily long BTC while Binance's is more balanced, Bybit's rate will be higher — even for the same underlying asset at nearly the same price.
Rate differences of 0.01–0.02%/8h are noise (fees and execution costs eliminate the edge). Differences above 0.03%/8h (~33% annualized on notional) are worth noting. Above 0.05%/8h the spread can survive round-trip execution costs on liquid pairs and becomes a real opportunity for well-capitalized traders who can margin both sides simultaneously.
Funding rate arbitrage — the delta-neutral trade
The mechanics: short the perp on the high-funding exchange, long the same perp on the low-funding exchange. You are delta-neutral (price moves cancel). Every 8 hours you receive funding on the short and pay less on the long, pocketing the spread. The main risks are: (1) margin requirement on both sides, (2) rates converging before you close, (3) execution slippage on entry and exit, (4) exchange risk. See the funding rate arbitrage calculator for exact P&L math.