Why Is an Aggregate Index Preferred over a Single Exchange's Price for Settlement? ⎊ Path

Why Is an Aggregate Index Preferred over a Single Exchange’s Price for Settlement?

Using an aggregate index, derived from multiple major exchanges, significantly reduces the risk of market manipulation on any single platform. If one exchange's price spikes or drops unnaturally, the index smooths out this volatility.

This provides a more robust, reliable, and fair settlement price for all contract holders, enhancing market integrity and trust in the derivative product.

Why Do Exchanges Use a Multi-Exchange Average for the Index Price?

Why Is an Average of Multiple Exchange Prices Often Used as the Reference Rate for Cryptocurrency Derivatives?

Why Is the Index Price Considered More Reliable than a Single Exchange’s Spot Price?

How Do Exchanges Ensure the Integrity of the Prices Included in the Aggregate Index?

What Are the Risks of Using a Single Exchange’s Price for Cash Settlement?

How Is the Index Price for a Perpetual Swap Typically Calculated across Multiple Exchanges?

How Does the Choice of the Settlement Index Affect Basis Risk?

What Is “Index Arbitrage” and How Does It Relate to the Aggregate Index?

Glossar

Aggregate Index

Construction ⎊ An aggregate index within cryptocurrency derivatives represents a synthesized metric derived from multiple underlying assets or instruments, frequently employed to gauge broad market sentiment or exposure.