To better serve our valued margin users, protect their assets, and to prevent the liquidation that might possibly occur due to the fluctuation of price in a single exchange, KuCoin has developed a spot index denominated in BTC which could be used on all crypto assets in margin markets, to maintain the fair of market.
For each cryptocurrency, KuCoin collects corresponding trading pairs from worldwide exchanges with the best market depth as index constituents. When the adopted trading pairs cannot meet the requirements or there appear trading pairs with better market depth, KuCoin will timely update them.
KuCoin also designed a mechanism to filter abnormal constituents, to make sure the fair market.
Spot index calculation rules:
- KuCoin will collect the latest quotes from all constituents every 5 seconds.
- If the constituent is not a BTC trading pair, for example, an USDT trading pair, then it will be converted to BTC based on the latest mark price of USDT/BTC.
- How to get the number of constituents that successfully obtained price 3.1 If the number is equal to or above 1, then the median will be used as the index price 3.2 If the number is 0, then the index price will be empty
The mark price of a crypto asset is based on its spot index price.
Mark price calculation rules:
- If the spot index is not empty, then the mark price = spot index price
- If the spot index calculation fails (for example, the index component exchange quotation fails or is abnormal), the mark price will smoothly transition to the average filled price on our exchange. When the spot index recovers, the mark price will again smoothly transition to the spot index price.
To calculate the debt ratio of the margin account under cross margin mode, KuCoin will refer to the mark price of assets, which is to convert all the assets and debts in the margin account into BTC based on corresponding mark price, and then calculate the debt ratio.
By August 2, 2020, the referenced trading pairs for the spot index in KuCoin’s margin market are indicated in the table below: