Determining whether a contract that’s soaring has been overheated is commonly done by checking how much higher the contract price is compared to the price index. Binance’s FAQ also says: “You may view the price index as the spot price.” But today MAGMA, which has surged by more than 40%, has one of its own contract components among the five components of the index.
At 11:18 Beijing time, I read: MAGMAUSDT perpetual rose 43.0% in the past 24 hours. Binance spot can’t find this trading pair. The index is composed of the latest prices from Gate, MEXC, Bitget, Binance Alpha, and Binance futures, each accounting for 20%.
Among the 528 USD-based perps being traded at the time, 526 had index components that could be found. Of those, 90 included this contract itself; 40 had their own weight of 20% or more. ZIL and ONE were 50%, with the other half being Binance spot. Of these 90, 73 had components that do not include Binance spot.
Binance didn’t hide this. In the same FAQ, the earlier paragraphs say: “Binance futures’ latest price will also be used as a component of the price index; specifically, it is determined at Binance’s discretion.” People remember only the latter sentence.
Once the contract itself is included in the index, its deviation from the index is discounted. Let w be the contract’s own weight. Then: index = w × contract price + (1 − w) × weighted price of other components. So the contract’s index premium is approximately (1 − w) × the contract’s premium versus other components. If the contract is 1% more expensive than the outside market, MAGMA’s index shows only about 0.8%; ZIL and ONE show only about 0.5%. At 11:18, MAGMA’s contract price was 0.18% higher than the average of the other four exchanges, but compared to the index, it was left at just 0.15%.
Two points I couldn’t verify: the weights are a snapshot from this morning, and the FAQ states that Binance may adjust them at any time without prior notice. Also, whether these contracts have always been configured this way—I couldn’t retrieve historical data.
So for these 90 contracts, the metric “how much more expensive than the index” is not how much more expensive than spot they are, but how much more expensive than an average that has mixed in their own price. The higher their own weight, the more their deviation is hidden by this reading. And most of them are coins for which Binance has no spot—meaning they rely on this reading the most.
$MAGMA #价格指数 #perpetual contract
At 11:18 Beijing time, I read: MAGMAUSDT perpetual rose 43.0% in the past 24 hours. Binance spot can’t find this trading pair. The index is composed of the latest prices from Gate, MEXC, Bitget, Binance Alpha, and Binance futures, each accounting for 20%.
Among the 528 USD-based perps being traded at the time, 526 had index components that could be found. Of those, 90 included this contract itself; 40 had their own weight of 20% or more. ZIL and ONE were 50%, with the other half being Binance spot. Of these 90, 73 had components that do not include Binance spot.
Binance didn’t hide this. In the same FAQ, the earlier paragraphs say: “Binance futures’ latest price will also be used as a component of the price index; specifically, it is determined at Binance’s discretion.” People remember only the latter sentence.
Once the contract itself is included in the index, its deviation from the index is discounted. Let w be the contract’s own weight. Then: index = w × contract price + (1 − w) × weighted price of other components. So the contract’s index premium is approximately (1 − w) × the contract’s premium versus other components. If the contract is 1% more expensive than the outside market, MAGMA’s index shows only about 0.8%; ZIL and ONE show only about 0.5%. At 11:18, MAGMA’s contract price was 0.18% higher than the average of the other four exchanges, but compared to the index, it was left at just 0.15%.
Two points I couldn’t verify: the weights are a snapshot from this morning, and the FAQ states that Binance may adjust them at any time without prior notice. Also, whether these contracts have always been configured this way—I couldn’t retrieve historical data.
So for these 90 contracts, the metric “how much more expensive than the index” is not how much more expensive than spot they are, but how much more expensive than an average that has mixed in their own price. The higher their own weight, the more their deviation is hidden by this reading. And most of them are coins for which Binance has no spot—meaning they rely on this reading the most.
$MAGMA #价格指数 #perpetual contract