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Index Price

Index Price is a core reference price used in perpetual futures and other derivatives, reflecting the true average price level of an asset across multiple major trading markets.

Unlike prices from a single exchange, Index Price is calculated as a weighted average of spot prices from several leading exchanges, offering greater stability and objectivity.

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I. Key Functions of Index Price

1) Preventing Price Manipulation A single exchange's price may experience abnormal fluctuations due to:

  • Insufficient liquidity

  • Large-volume trades within a short timeframe

  • Extreme market volatility

By consolidating data from multiple exchanges, the Index Price effectively avoids unfair liquidations or incorrect settlements caused by anomalies on a single platform.

2) Reducing Unnecessary Liquidation Risks In the NewCoin futures system:

  • The liquidation benchmark is based on the Index Price (or the Mark Price derived from it),

  • Not the latest transaction price in the order book.

This helps prevent positions from being incorrectly liquidated due to instant price spikes ("wicking") or extreme market movements.

3) Used for Funding Rate Calculation The Funding Rate for perpetual futures is typically calculated based on the Index Price, ensuring that fee settlements between long and short positions are fair, smooth, and stable.

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II. How is Index Price Calculated?

NewCoin collects spot prices for the same trading pair from multiple major exchanges, such as:

  • Binance

  • OKX

  • Bybit

  • Other major platforms with sufficient liquidity

The system filters outliers and applies weighted averaging to prices from these exchanges to generate the final Index Price, accurately reflecting the overall market price level.

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III. Core Significance of Index Price

Index Price ≠ Price from a single exchange Index Price = Weighted average price across multiple platforms

Its fundamental purpose is to:

  • Enhance price stability

  • Reduce systemic risk

  • Ensure fairness in futures trading

  • Provide users with a safer trading environment during extreme market conditions

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