# Index price

> The index price is a reference value intended to represent the external spot price of the asset underlying a derivative. A venue may combine prices from multiple exchanges or oracle publishers, apply weights, and remove stale or abnormal inputs. The index can inform funding, marking, settlement, and other risk calculations.

- Canonical page: https://lynx.finance/glossary/index-price/
- Published: 2026-07-31
- Updated: 2026-07-31
- Last reviewed: 2026-07-31
- Written by: Lynx Editorial
- Technical review: Lynx Protocol Team
- Category: Pricing and execution
- Also known as: spot index, reference price
- Related terms: [Mark price](https://lynx.finance/glossary/mark-price/), [Funding rate](https://lynx.finance/glossary/funding-rate/), [Perpetual futures](https://lynx.finance/glossary/perpetual-futures/), [Liquidation](https://lynx.finance/glossary/liquidation/)
- Related articles: [On-chain perpetual futures, explained](https://lynx.finance/blog/onchain-perpetual-futures-explained/), [Why funding rates go negative (and what it tells you)](https://lynx.finance/blog/why-funding-rates-go-negative/)

## In plain English

No single exchange owns the one true price of BTC, ETH, or another traded asset. Prices can differ slightly across markets. An index applies a published method to turn selected observations into one reference value for a derivatives contract.

A robust index tries to remain useful when one source is stale, unavailable, or briefly abnormal. Its quality depends on source selection, weighting, update speed, and outlier handling.

## How it works

A centralized venue might read several spot exchanges. An on-chain venue might consume an oracle that aggregates independent publishers. The method can use a median, weighted average, time-weighted value, or other calculation. Each design has different trade-offs.

The index can anchor the [funding rate](https://lynx.finance/glossary/funding-rate/) and feed the [mark price](https://lynx.finance/glossary/mark-price/). It may also be used for settlement or protective market controls.

## Why it matters

Traders should know which market their derivative is actually tracking. An index with weak sources or slow updates can misrepresent current conditions. During volatile periods, differences between the index, mark, last trade, and executable price can widen.

## Worked example

Imagine an intentionally simple equal-weighted index with three valid spot inputs: `$60,000`, `$60,030`, and `$59,970`.

Their average is `($60,000 + $60,030 + $59,970) ÷ 3 = $60,000`. A real methodology might use weights, medians, confidence intervals, or exclusion rules, so this arithmetic is illustrative rather than universal.

## How it works on Lynx

Lynx currently uses on-demand price updates from Pyth for opening and closing trades. That oracle price references the traded instrument and is independent of the token selected as collateral.

The Pyth feed—not Lynx’s interface—defines how its publishers and aggregation produce the reference value. The number is an accounting and execution input, not a promise that the same price is available on a spot exchange.

## Common misconception

> An index price is not necessarily tradable. It is a calculated reference; the price available for opening or closing a position depends on the venue’s execution model and liquidity.

## Sources

- [How perpetual futures stay in line with the index price](https://help.coinbase.com/en/international-exchange/perpetual-futures-basics/how-do-perpetual-futures-stay-in-line-with-index-price-of-the-underlying-spot-asset) — Coinbase International Exchange (primary)
- [How the Pyth oracle program aggregates publisher data](https://docs.pyth.network/price-feeds/core/how-pyth-works/oracle-program) — Pyth Network (technical)
- [Traders](https://lynx-finance.gitbook.io/lynx-finance/for-users/traders) — Lynx Finance (primary)