Index price trading, referred to as the index price, is the average spot price of a token across several major exchanges. Typically, the index price of a currency may vary between different exchanges, depending on which trading platforms are considered "major exchanges." Only data from these exchanges is taken into account.
The calculation method for the index price is as follows:
Index Price = Exchange A's Spot Price × Exchange A's Weight + Exchange B's Spot Price × Exchange B's Weight + ……
The higher the trading volume of an exchange, the greater its weight. This means that the larger the trading volume, the greater the influence of the exchange on the index price.
The purpose of the index price is to provide a fair and accurate price for an asset in various aspects of derivatives trading, including futures, perpetual futures, and funding rates. In other words, the index price ensures that derivatives contracts are settled at an appropriate price.