Index price
Also called: spot index · price index
Definition
The index price is a reference price for an asset calculated from a weighted average of spot prices on several major exchanges, used to anchor futures pricing.
How index price works
An exchange running a perpetual or delivery contract needs a fair reference for the underlying coin. Instead of relying on its own spot market alone, it pulls prices from several large spot venues and combines them, often with weights and rules that exclude outliers or exchanges that stop updating.
The index price feeds into the mark price, which drives liquidations and unrealized PnL. It is also the benchmark for the funding rate: when the perpetual trades above the index, funding tends to be positive. Delivery futures usually settle at an average of the index price over a set window before expiry.
Because each exchange chooses its own sources and weights, index prices differ slightly between exchanges. In DeFi, a similar role is played by oracles, which bring external prices on-chain. If an index relies on too few or thin sources, it can be manipulated, which is why exchanges publish their index components.
Example
Suppose an exchange's ETH index uses three spot sources with equal weight: 3,010, 3,004 and 2,999 USDT. The index price is (3,010 + 3,004 + 2,999) ÷ 3 = 3,004.33 USDT. If the ETH perpetual trades at 3,019, it sits about 0.5% above the index, a premium that pushes funding higher. If one source suddenly printed 2,800, outlier rules would typically reduce its weight or exclude it.
Common mistakes
- Assuming the index price is a single exchange's spot price.
- Expecting the index to be identical on every derivatives exchange.
- Ignoring the index when judging whether funding is likely to be high or low.
Learn and practise
FAQ
What is the difference between index price and mark price?
The index price is an average of spot prices. The mark price starts from the index and adds a smoothed futures premium; it is what liquidations use.
Where can I see the index components?
Most exchanges publish the source exchanges and weights for each index on their contract information or index pages.