An index price is a reference value built from prices on selected markets. A derivatives exchange may use an index to calculate a mark price, assess a contract premium, or inform funding calculations. Each venue sets its own constituent markets, weights, filters, and update rules.
Construction
An index provider can combine spot prices from several exchanges. The method may weight markets by volume, remove outliers, or pause a constituent feed when it stops meeting quality rules. The resulting value can still be affected by stale inputs, outages, thin trading, or a disruption at a constituent venue.
An index is therefore a measured reference, not a universal price. Two exchanges can display different index values because their formulas and source markets differ.
Equal-Weight Example
Suppose a sample index uses three spot prices: $65,000, $65,100, and $64,900. An equal-weight average is $65,000. A real exchange may use weights and filters that produce a different value. This example shows the arithmetic, not the formula for a named venue.
Use With Derivatives
An exchange may use its index price as an input to its mark price. The mark price may then inform margin and liquidation calculations. Perpetual contracts can also use an index or index premium in funding calculations. Traders should consult the venue's contract rules for the exact chain of calculations.
Bybit's contract rules describe one venue's index inputs and weighting method.
Read the related definitions for perpetual swaps, funding rates, and margin, or review the crypto market structure guide.