What Are Mark Price and Price Index in USDⓈ-Margined Futures ?
1. Mark Price
The Mark Price is a mechanism used in crypto futures trading on Binance to ensure fair and accurate pricing of futures contracts.
2-Price Index
The Price index is used to mitigate risks arising from price volatility and market manipulation by providing a more stable reference point. Instead of the asset's last price, the Price Index takes into account the price of the asset across multiple exchanges. You may read more about the differences between the Mark Price and the Last Price in this blog article.
On Binance Futures, a contract's Mark Price is determined by considering several factors such as the futures contract's Last Price, the bid1 and ask1 series from the order book, the funding rate, and a composite average of the underlying asset's spot price on major crypto exchanges.
The Price Index is used to calculate the Mark Price and is based on the weighted average spot price of the asset across multiple crypto exchanges.
2. What is the USDⓈ-M Futures Price Index?
The Price Index is the primary component of Mark Price. It is the weighted average value of the underlying asset listed on major spot exchanges, which reflects the fair market value of the futures contract and is constantly updated to account for any changes in the asset’s spot price or the weighting of the exchanges used to calculate the index.
At Binance, the Price Index for USDⓈ-M Futures contracts derives prices from KuCoin, OKX, HitBTC, Gate.io, Ascendex, MEXC, Coinbase, Kraken, and Bybit.
u can check the real-time Price Index Inf on the Bin web.
How to calculate the Price Index for perpetual futures contracts?
Price Index = Sum of (Weight Percent of Exchange A * The Symbol’s Spot Price on Exchange A + Weight Percent of Exchange B * The Symbol’s Spot Price on Exchange B +.+ Weight Percent of Exchange N * The Symbol’s Spot Price on Exchange N)
Weight Percent of Exchange i = Weight of Exchange i / Total Weight
Total Weight = Sum of (Weight of Exchange A + Weight of Exchange B + .+ Weight of Exch