How to calculate ProBit Global contract rates

ProBit Global's contract rates are influenced by the underlying asset's price, contract type, funding rates, and oracle price.

Dec 04, 2024 at 08:35 am

How to Calculate ProBit Global Contract Rates

ProBit Global, a leading cryptocurrency exchange, offers a diverse range of contract trading options, allowing traders to speculate on the future price movements of cryptocurrencies. Understanding how ProBit Global calculates its contract rates is crucial for making informed trading decisions.

Key Factors Influencing Contract Rates

Before examining the specific steps involved in calculating ProBit Global contract rates, it's essential to understand the key factors that influence these rates:

• Underlying Asset Price: The price of the underlying cryptocurrency, such as Bitcoin or Ethereum, is the primary determinant of contract rates.
• Contract Type: ProBit Global offers perpetual and futures contracts, each with different calculation methodologies.
• Funding Rates: Funding rates are periodic adjustments applied to contracts to maintain their fair value.
• Oracle Price: ProBit Global uses a proprietary oracle provider to determine the underlying asset's price.

Step-by-Step Calculation

1. Determine the Underlying Asset Price

ProBit Global uses a unique oracle price mechanism to determine the underlying asset's value. The oracle collects data from multiple reliable sources and applies advanced algorithms to generate a consensus price.

• Multi-Source Data: The oracle aggregates data from top cryptocurrency exchanges and market makers.
• Weighted Average: The oracle uses a weighted average approach, where each data source's price is assigned a weight based on its reliability and accuracy.
• Consensus Price: The final oracle price represents the consensus among these multiple reliable data sources.

2. Calculate the Contract Price

The contract price is the prevailing price at which contracts can be traded on ProBit Global. It is closely tied to the underlying asset's price but can deviate slightly due to factors like order imbalances and funding rates.

• Perpetual Contracts: Perpetual contracts have no fixed expiry date and their price is continuously settled against the underlying asset's price.
• Futures Contracts: Futures contracts have a fixed expiry date, and their price reflects the expected value of the underlying asset at that future date.

3. Incorporate Funding Rates

Funding rates are periodic adjustments made to contracts to ensure they align with the spot market price. Positive funding rates incentivize traders to hold long positions, while negative funding rates incentivize short positions.

• Funding Rate Calculation: Funding rates are typically calculated every 8 hours and are based on the difference between the contract price and the spot market price.
• Impact on Contract Price: Positive funding rates will increase the contract price, and negative funding rates will decrease the contract price.

4. Adjust for Price Markups and Discounts

ProBit Global applies price markups or discounts to contracts based on market conditions and liquidity levels. This helps ensure that contracts maintain a fair and competitive trading environment.

• Price Markups: In periods of high demand, ProBit Global may apply a premium (markup) to contract prices to discourage excessive speculation.
• Price Discounts: Conversely, in periods of low demand, ProBit Global may offer a discount to incentivize trading and increase contract liquidity.