Gate.io has launched index perpetual contract trading settled in USDT. Traders can profit by going long or short with 1–20x leverage. An indexed contract is a contract with an equally weighted index as its underlying asset. Every component token in an equally weighted index weighs the same. With regular adjustment, equal weight will be ensured.
Illustration of Equally Weighted Index Components
Let’s take an equally weighted index containing four types of tokens {A, B, C and D} priced at 1, 2, 5 and 10 USDT respectively.
If we purchase 2,000 USDT worth of the said index, then the value of each component would be 500 USDT. The amount of tokens would be 500, 250, 100 and 50 respectively.
If the price of token A increases by 10%, token B decreases by 5%, token C decreases by 2% and token D increases by 3%, then the increase of the index would be: (10%-5%-2%+3%)/4=1.5%
Every token carries the same weight towards influencing the index hence named an equally weighted index.
*Every type of token weighs the same at the beginning in an equally weighted index. However, as token price rises or drops, the weight will be different. Therefore, the index will be balanced every quarter.
The Advantages of Equally Weighted Index Contracts
Compared to single token index contracts, equally weighted index contracts have the following advantages:
1. Ease of Selection
Taking the recent DeFi trend as an example; not many investors have the time to spend on conducting research on every token on the market — making it hard for them to select the most valuable ones. In contrast, an equally weighted index contract provides convenience to investors in selecting a promising project. For example, if they think highly of the DeFi space, they can purchase the DeFi index contract.
2. Diversification
Compared to single token indexes, the change of an equally weighted one will be much lower and it can tolerate some tokens’ fierce fluctuations, providing investors with valuable time to reap their profits.
Gate.io Index Perpetual Contract Trading
1. ALT_USDT (Competitive token index)
Tokens with high market capitalisation and good liquidity are selected.
trade here: https://www.gate.io/futures_trade/USDT/ALT_USDT
2. EXCH_USDT (Exchange token index）
A selection of major exchange tokens, reflecting the development of exchanges.
trade here: https://www.gate.io/futures_trade/USDT/EXCH_USDT
3. DEFI_USDT (DeFi token index）
A selection of DeFi tokens with good liquidity and great potential, reflecting the development of the DeFi industry.
trade here: https://www.gate.io/futures_trade/USDT/DEFI_USDT
4. PRIV_USDT (Privacy token index)
A selection of the top privacy tokens, reflecting the development around privacy tokens..
trade here: https://www.gate.io/futures_trade/USDT/PRIV_USDT
*Currently, index perpetual contract trading is only supported on the Web interface.Will be enabled on our Mobile App soon. Please stay tuned!
For more information about perpetual indexes, please refer to:
https://www.gate.io/help/futures/Perpetual/17667
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