Index Value Methodology

Outstanding perpetual contracts are designed to track the value of our index oracle.

The construction of this index is critical to the product's functionality. To enable robust blockspace derivative trading, we've implemented measures to prevent manipulation and ensure the most accurate and relevant pricing possible.

144-Block Median Tx Fee Rate Exponential Moving Average

This index, which our perpetual contracts follow, is based on the median transaction fee rate (50th percentile) of the most recent 144 blocks. Here’s how it works:

The index calculates the median transaction fee rate for the latest mined block and the previous 143 blocks, all from the chain with the most cumulative work. The median fee rate represents the transaction fee at the 50th percentile within a block's transactions, filtering out outliers to reflect the "typical" fee required for confirmation in that block.

Example:

Assuming the current block height is N.

Block Number

Median Tx Fee

After collecting these values, an exponential decay rate is applied, giving greater weight to more recent blocks, while older blocks contribute less. This ensures that the index closely tracks recent transaction fee trends while also reducing the potential for manipulation (e.g., by spamming the network to artificially inflate fees and influence trading positions).

The 144-block window corresponds to roughly one day of Bitcoin blocks, given Bitcoin’s average block time of 10 minutes.

Key components of the index:

Fee Rate: The fee rate represents the transaction fee paid per unit of data in the transaction, measured in satoshis per vbyte (sats/vbyte). A satoshi is the smallest unit of Bitcoin (1 BTC = 100,000,000 satoshis), and a vbyte (virtual byte) is a measurement of transaction size that accounts for SegWit (Segregated Witness) improvements. Higher fee rates increases a transaction’s chances to be included in the next block.
Median Transaction Fee Rate: The 50th percentile fee rate in each block, representing the typical fee required for confirmation. The median is used instead of an average to reduce the impact of outliers.
Exponential Moving Average (EMA): This technique is used to calculate the current index value, assigning greater weight to more recent blocks to better reflect current transaction fee conditions.
Moving: As each new block is mined, the oldest block (N - 143) is dropped from the calculation, and the data from the most recent block is added.

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Last updated 23 days ago

144-Block Median Tx Fee Rate Exponential Moving Average

This index, which our perpetual contracts follow, is based on the median transaction fee rate (50th percentile) of the most recent 144 blocks. Here’s how it works:

Example:

Assuming the current block height is N.

Block Number

Median Tx Fee

The 144-block window corresponds to roughly one day of Bitcoin blocks, given Bitcoin’s average block time of 10 minutes.

Key components of the index:

Fee Rate: The fee rate represents the transaction fee paid per unit of data in the transaction, measured in satoshis per vbyte (sats/vbyte). A satoshi is the smallest unit of Bitcoin (1 BTC = 100,000,000 satoshis), and a vbyte (virtual byte) is a measurement of transaction size that accounts for SegWit (Segregated Witness) improvements. Higher fee rates increases a transaction’s chances to be included in the next block.

Median Transaction Fee Rate: The 50th percentile fee rate in each block, representing the typical fee required for confirmation. The median is used instead of an average to reduce the impact of outliers.

Exponential Moving Average (EMA): This technique is used to calculate the current index value, assigning greater weight to more recent blocks to better reflect current transaction fee conditions.

Moving: As each new block is mined, the oldest block (N - 143) is dropped from the calculation, and the data from the most recent block is added.