1. Index Mechanism
First launched by 58COIN in the Asian region, the Index Mechanism uses the index price as the key indicator and has certain guiding significance when being used to represent the reasonable price of BTC, ETH, etc. in the global spot market. In addition, it is also served as the core indicator for calculating the unrealized PNL (profit and loss) and determining the position risk of the perpetual contract.
Currently, the index price of the perpetual contract, including Mix Contract, Swap, is taken from the weighted average of the spot price of Binance and Huobi Pro, with the rate of “Binance 70%, Huobi Pro 30%”.
The index price is taken based on a certain period of time, by integrating the spot prices of the tethered exchanges, it will be displayed on the platform according to the last time point (accurate to the second-level) of the taken cycle.
2. Index Mechanism in Extreme Cases
1) If a certain data source is abnormal, such source will be removed from the index component and the weight of another data source will be automatically adjusted to 100% as the index price at that time.
2) If the two major data sources (Binance 70%, Huobi Pro 30%) are abnormal, the alternate source OKEx with the index weight of 100% will be used as the index price at that time.
3) If the current designated data source and the backup data source are abnormal at the same time, all the services involved in contract products will be suspended until the recovery.
In the above cases, if any data source is restored, the index mechanism will be re-adjusted according to the principle of “specified component first”. Due to the objective differences between the various data sources, large fluctuations may occur during the adjustment and bring significant risks to the holding positions, investors should be aware and take precautions in advance.