Explanation on the Extreme Market and Index Mechanism

2 min readApr 3, 2020

Dear 58COIN users,

Concerning the issue of extreme market earlier this morning — the occurrence of the upper and lower shadows in the perpetual contract market, users expressed their concern about the safety of their positions. In this regard, users are reminded to rest assured, in that the index mechanism, which was first launched by our platform in Asian regions, can prevent your positions from being affected by extreme market conditions. In terms of the extreme market and index mechanism, we hereby make the following explanations:

1. About Extreme Market

Extreme Market occurs from time to time in the entire digital asset market and is a reflection of market trading. If the various markets are divided by region and platform, they are countless. The extreme market reflected by users in the morning actually exists in 58COIN’s floor trading, which adopts the matching mechanism in a way to ensure either the market order or the limit order can be executed at the best market price. Regarding the occurrence of extreme market, the purchasing and selling price set by the buyer and the seller, and the activity of trading in the market, etc., are the crucial contributing factors.

2. About Index Mechanism

After the extreme market occurs, some users are worried about the safety of their positions. However, at 58COIN, users will never need to worry about this issue. Since under the function of the index mechanism, the risk of your positions is related to the index price — tethering to the global spot markets, rather than correlated to the market price change directly. Even the extreme market occurs — the great deviation of the latest transaction price, it will not bring risks to the holding positions. This is the core difference from traditional competing contracts.

The index mechanism was first launched by 58COIN in Asian regions, and the index price works as the key indicator. With certain guiding significance, Index Price represents the fair prices of BTC, ETH, etc., in the global spot market. It can be used to determine the position risk, and serves as the basis for calculating the unrealized profit and loss of perpetual contracts. The current perpetual contracts of 58COIN, including the USDT contract, the standard contract, and the mix contract, take the weighted average of Binance’s and Huobi Global’s spot prices as the index price.

We hope the above explanation can clear up the doubts of some users and deepen your understanding of 58COIN’s perpetual contracts. As the featured product, the perpetual contract has been designed to provide investors with more scientific, transparent, and advanced digital asset trading experience since its launch. We will continue to adhere to the operating principle of “User First, Security, Strength, and Trust” to provide you with higher quality contract services.

58COIN Exchange

April 2, 2020