**Index price** is derived from the estimated index price *.ECOIN*(BTC,ETH,XRP,EOS). We will use BTC as an example for the explanation below.

** .EBTC** is the sum of the weighted BTC spot trading prices from the following exchanges,

**Bitstamp**,

**Coinbase Pro**,

**Kraken, Gemini**and

**Bittrex**. The weight (Trade_Wt) is determined by their respective monthly trade volume from the previous month.

As .*EBTC* may be an inaccurate representation should any one of the 5 exchange’s spot price deviate significantly from the other 4. Bybit will factor in the price spread between each exchange and *.EBTC* to calculate the **Index Price**. The exchange with the largest price spread from *.EBTC* will hold the least significant weightage on the **Index** **Price**.

$$ \text{Trade Wt_A} = {{ \text{Monthly Trade Vol. (A)}} \over {{\text{Monthly Trade Vol. (A)}} + { \text{Monthly Trade Vol. (B)} }+ { \text{Monthly Trade Vol. (C)}}}} $$

$$\text{.EBTC} = {\text{Trade Wt_A } \times \text{Spot Price_A} + \text{Trade Wt_B } \times \text{Spot Price_B} + \text{Trade Wt_C } \times \text{Spot Price_C}}$$

$$\text{Price Spread} = {\text{|Exchange's Spot Price} - .EBTC|}$$

An inverse square of an exchange’s price spread shall be used as the adjusted weight of the exchange.

$$ \text{Trade Wt_A} = {{1 \over \text{Price Spread(A)}^2} \over {{1 \over \text{Price Spread(A)}^2} + {1 \over \text{Price Spread(B)}^2 }+ {1 \over \text{Price Spread(C)}^2}}} $$

The **Index Price **shall then be derived from the sum of the *Spot Price* for each exchange multiplied by the respective *Weight of Exchange (W_T)*.$$\text{Index Price} = ({\text{Spot Price_A}\times\text{W_A)}}) + ({\text{Spot Price_B} \times\text{W_B}}) + ({\text{Spot Price_C}\times\text{W_C}})$$

Bybit will only temporarily exclude an exchange from the index calculation when the following conditions are triggered:

1. The latest spot price obtained from an exchange has not changed for more than a minute. This is to remove the exchanges that are suffering from liquidity issues or are experiencing a service disruption.

2. The spot price obtained from an exchange deviates from the average price of the spot prices of the other 4 exchanges by more than 3%. This is to eliminate the occurrence of any price abnormality.

Example**:**

**1. When Exchange's BTC prices are relatively close:**

$$\text{Exchange A Spot: } = {$10,048.00}$$$$\text{Exchange B Spot: } = {$10,046.00}$$$$\text{Exchange C Spot: } = {$10,056.00}$$ $$\text{.EBTC} = {1\over3} \times {$10,048.00} + {1\over3} \times {$10,046.00} + {1\over3} \times {$10,056.00} = {$10,050.00}$$$$\text{Price Spread of A} = {|{$10,048.00} - {$10,050.00}|} = $2.00 $$$$\text{Price Spread of B} = {|{$10,046.00} - {$10,050.00}|} = $4.00 $$$$\text{Price Spread of C} = {|{$10,056.00} - {$10,050.00}|} = $6.00 $$

$$ \text{Calculated A Weightage} = {{1 \over {$2.00}^2} \over {{1 \over {$2.00}^2} + {1 \over {$4.00}^2 }+ {1 \over {$6.00}^2}}} = 0.7346938775510203 $$$$ \text{Calculated B Weightage} = {{1 \over {$4.00}^2} \over {{1 \over {$2.00}^2} + {1 \over {$4.00}^2 }+ {1 \over {$6.00}^2}}} = 0.18367346938775508 $$$$ \text{Calculated C Weightage} = {{1 \over {$6.00}^2} \over {{1 \over {$2.00}^2} + {1 \over {$4.00}^2 }+ {1 \over {$6.00}^2}}} = 0.08163265306122448 $$

Hence, .BTCUSD **Index Price **will be the following:

$$\text{Index Price} = \text{Calc A Weightage} \times {$10,048.00} + \text{Calc B Weightage} \times {$10,046.00} + \text{Calc C Weightage} \times {$10,056.00} \approx {$10,048.29}$$

**2. When one Exchange's BTC price differs from the other two Exchange:**

$$\text{Exchange A Spot: } = {$10,060.00}$$$$\text{Exchange B Spot: } = {$10,040.00}$$$$\text{Exchange C Spot: } = {$10,500.00}$$ $$\text{.EBTC} = {1\over3} \times {$10,060.00} + {1\over3} \times {$10,040.00} + {1\over3} \times {$10,500.00} = {$10,200.00}$$$$\text{Price Spread of A} = {|{$10,060.00} - {$10,200.00}|} = $140.00 $$$$\text{Price Spread of B} = {|{$10,040.00} - {$10,200.00}|} = $160.00 $$$$\text{Price Spread of C} = {|{$10,500.00} - {$10,200.00}|} = $300.00 $$

$$ \text{Calculated A Weightage} = {{1 \over {$140.00}^2} \over {{1 \over {$140.00}^2} + {1 \over {$160.00}^2 }+ {1 \over {$300.00}^2}}} = 0.5041840271699171 $$$$ \text{Calculated B Weightage} = {{1 \over {$160.00}^2} \over {{1 \over {$140.00}^2} + {1 \over {$160.00}^2 }+ {1 \over {$300.00}^2}}} = 0.3860158958019677 $$$$ \text{Calculated C Weightage} = {{1 \over {$300.00}^2} \over {{1 \over {$140.00}^2} + {1 \over {$160.00}^2 }+ {1 \over {$300.00}^2}}} = 0.10980007702811527 $$

Hence, .BTCUSD **Index Price **will be the following:

$$\text{Index Price} = \text{Calc A Weightage} \times {$10,060.00} + \text{Calc B Weightage} \times {$10,040.00} + \text{Calc C Weightage} \times {$10,500.00} \approx {$10,100.59}$$

As shown in **Example 2**, when one of the exchange’s spot is significantly different from the others, as compared to the *.EBTC*, the adjusted weight **Index Price** is a better indicator for unrealized profits and losses.