# What Is Index Price?

The **Index Price** is a reference price used in perpetual contracts and other derivatives. It represents the **fair, aggregated market price** of an asset based on major exchanges, rather than relying on a single platform’s price.By pulling data from multiple markets, the Index Price provides a more stable and objective benchmark for trading and risk management.

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### **Why the Index Price Matters**

1. #### **Prevents Price Manipulation**

     Prices on a single exchange may spike due to low liquidity or abnormal trading activity.  Using prices from multiple platforms reduces the impact of such anomalies and prevents unfair liquidations or incorrect settlements.

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2. #### **Reduces Unnecessary Liquidation Risk**

     When the system checks whether a position should be liquidated, it uses the **Index Price**, not the last traded price on YUBIT. This avoids accidental liquidations caused by sudden, short-term price swings on a single exchange.

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3. #### **Used for Funding Rate Calculations**

     The funding rate is typically based on the Index Price, ensuring fair and stable rate calculations across different markets.

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### **How the Index Price Is Calculated**

YUBIT aggregates price data for the same trading pair from several major exchanges (such as Binance, OKX, Bybit, etc.). These prices are then combined using a **weighted average formula**, resulting in a fair and balanced Index Price.

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### **Summary**

* **Index Price** = A weighted average of prices from multiple major exchanges
* More **stable**, **fair**, and **resistant to manipulation**
* Used for:
  * Liquidation checks
  * Funding rate calculations
  * Risk control
* Designed to give traders a **safer and more reliable experience**, especially during extreme market conditions