Reference Index

A reference index is a calculated benchmark used to determine the settlement price of a derivative contract. It is typically composed of data from multiple exchanges to ensure that the price is representative of the global market and resistant to manipulation by a single venue.

The index is designed to provide a transparent and objective price that all market participants can trust. For cryptocurrency derivatives, reference indices are critical for bridging the gap between volatile local exchange prices and the broader market value.

By using a robust index, protocols can provide fair settlement and minimize the risk of anomalous price events impacting their derivative products.