An index price is a calculated market reference built from selected price sources under a defined methodology. In crypto derivatives it commonly summarizes underlying market prices, often from several spot venues, rather than representing one executable order.
Combining market data
The provider selects constituents, converts quotes when necessary and assigns weights. It may exclude stale or abnormal data, smooth changes or use fallback sources during disruptions. Some products permit non-spot inputs, so “index” does not guarantee an exclusively spot-based calculation.
As a simplified example, two valid sources priced at 100 USDT and 102 USDT with equal weights produce an index of 101 USDT. Actual indexes can use unequal weights and more complex safeguards.
How the reference is used
An index may feed mark-price calculations, funding measures or expiry settlement. Each use can apply further adjustments or averaging, so the displayed index need not equal a contract’s mark price or final settlement price.
A trader cannot assume a fill at the index value. Venue-specific constituents and rules can produce different indexes for the same named asset. Data quality, source concentration and emergency methodology changes remain relevant risks even when several markets contribute.