What is Mark Price?
Mark Price represents the fair current valuation of the contract market, derived from the spot index price and premium index. Its primary purpose is to prevent market manipulation and avoid unnecessary forced liquidation. When the market trading price diverges from external spot prices, the mark price stabilizes internal pricing and mitigates excessive price volatility.
Mark Price Calculation Formula
Mark Price = Median (Price1, Price2, Latest Transaction Price)
Price1 = Index Price × (1 + Funding Fee Basis Rate) Funding Fee Basis Rate = Funding Rate × (Time to Next Funding Payment / Funding Fee Interval)
Price2 = Index Price + 5-minute Moving Average 5-minute Moving Average = Average of [(Buy Price + Sell Price) / 2 - Index Price]
Latest Transaction Price: The latest market transaction price of BitDa’s contract market, typically linked with the spot market to prevent the product price from deviating significantly from the spot price.
Function of Mark Price
The main function of the mark price is to reduce forced liquidation caused by short-term market fluctuations.
Since the mark price reflects the “real” market value of the contract, it effectively prevents market manipulation.
For example, when the spot price is $5,000 and the contract market price is $5,010, the mark price anchors the external spot price to avoid forced liquidation due to price deviation.
Risk Warning
Contract trading carries significant risks, especially in cases of sharp price fluctuations. The mark price may deviate considerably from the latest market transaction price.
Since unrealized profits and losses are calculated based on the mark price, this may lead to discrepancies between the displayed and actual profits and losses. During trading, users should closely monitor the gap between the mark price and the estimated liquidation price to prevent forced liquidation caused by market fluctuations. Please note that all trades should be made with caution. The mark price is for reference only, and actual transactions are based on the latest transaction price.