Premium Index
Glossary · Derivatives
The premium index is the gap between a perpetual's impact prices and the spot index, averaged over the funding interval; it is the input the exchange turns into the funding rate. Positive premium means the perp trades rich to spot and longs will pay; negative means it trades cheap and shorts will pay. It is funding before funding.
"Funding is the bill; the premium is the meter running. Watch the meter and you know the bill before it arrives."
Exchanges compute the premium from the impact bid and ask — the average price of a fixed notional at the top of the book — against the spot index, sampled every few seconds and averaged. The funding rate is that average plus an interest component, clamped to a cap. Because it is a running average, the predicted funding shown mid-interval drifts toward what will settle, and a jump in the premium during the hour before settlement moves the rate.
How traders use it: the predicted rate published mid-interval is the premium telling you what is coming; a perp that has traded a full percent above spot for the last two hours will settle a large positive rate, and shorts opened before settlement collect it. The basis tape shows the premium as each venue's perp against spot, so a coin rich on one venue and flat elsewhere is a local crowd, not a market-wide one.
Basis per venue on the price tape
Related jargon
Questions
- What is Premium Index in crypto trading?
- The premium index is the gap between a perpetual's impact prices and the spot index, averaged over the funding interval; it is the input the exchange turns into the funding rate. Positive premium means the perp trades rich to spot and longs will pay; negative means it trades cheap and shorts will pay. It is funding before funding.
- How would a trader say it?
- Funding is the bill; the premium is the meter running. Watch the meter and you know the bill before it arrives.
Part of the Crypto Jargon glossary — every term, decoded the way a trader would say it.
Crypto Jargon
Live numbers load with JavaScript and refresh every few minutes; the text above is the page at build time.