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What Is the Role of the ‘Spot Index Price’ in the Funding Rate Calculation?

The spot index price is the benchmark price, aggregated from multiple exchanges, used to determine the premium of the perpetual contract for the funding rate calculation.
Greeks.Live23.11.25

What Is the Role of the ‘Spot Index Price’ in the Funding Rate Calculation?

The spot index price serves as the true market value benchmark for the underlying cryptocurrency. It is calculated by aggregating the price of the asset across multiple major spot exchanges, often using a volume-weighted average.

This index is used to calculate the 'premium' of the perpetual contract, which is the input for the funding rate formula. Using an index prevents a single exchange's spot price from being easily manipulated.

What Is the Role of an Index Price in the Settlement of a Crypto Futures Contract?
How Is ‘Volume-Weighted Average Price’ (VWAP) Used as a Benchmark for Trade Execution?
Why Do Exchanges Use a Multi-Exchange Average for the Index Price?
How Does the Index Price Differ from the ‘Mark Price’ Used in Perpetual Futures Trading?

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