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The premium index measures how far the perpetual contract price has diverged from the oracle price. This divergence drives the funding rate: when the perp trades at a premium, longs pay shorts, incentivizing the price back toward the oracle. When it trades at a discount, shorts pay longs. The premium index is the mechanism that keeps perpetual futures prices anchored to their underlying assets. The formula: 
Premium Index = (max(Impact Bid - Oracle Price, 0) - max(Oracle Price - Impact Ask, 0)) / Oracle Price

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Impact Prices

The impact bid and ask prices are the volume-weighted average execution prices for a simulated order of a standard size against the order book:
  • Impact Bid Price: Average fill price for a simulated sell order of the Impact Price Quote Size
  • Impact Ask Price: Average fill price for a simulated buy order of the Impact Price Quote Size

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Impact Price Quote Size

The Impact Price Quote Size is $1,000 (notional) for all markets. There is no per-market differentiation. This applies uniformly across all production markets (equities, indices, commodities, and ETFs).

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Interpretation

ConditionPremium Index
Oracle price within the bid-ask spreadZero
Perp trading above oracle (premium)Positive
Perp trading below oracle (discount)Negative
The premium index is sampled every minute (60 samples per funding interval) and averaged over the hour to compute the funding rate.

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Funding rates

How the premium index combines with the interest rate to produce the hourly funding rate.

Mark price protection

The external oracle price the premium index is measured against.