How Does the "Mark Price" Calculation Affect Liquidation Triggers? ⎊ Path

How Does the “Mark Price” Calculation Affect Liquidation Triggers?

The mark price is an estimate of the true value of a futures or perpetual contract, typically derived from the spot price and the funding basis, rather than the last traded price. Exchanges use the mark price, not the last price, to calculate the unrealized P&L and trigger liquidations.

This prevents market manipulation ("wicks") from unfairly triggering liquidations, but a sustained divergence still triggers them.

How Does a Derivatives Exchange Use Multiple Oracles to Prevent Unfair Liquidation?

Define the Term “Mark Price” and Its Significance in Preventing Unfair Liquidations

Why Do Exchanges Use a Mark Price Instead of the Last Traded Price for Liquidation?

What Is the ‘Mark Price’ and Why Is It Used Instead of the ‘Last Traded Price’ for Liquidation?

What Are the Risks of Using a ‘Mark Price’ versus a ‘Last Price’ for Liquidation Triggers?

What Is the Difference between Mark Price and Last Traded Price?

What Is ‘Mark Price’ and How Do Oracles Contribute to Its Calculation?

What Is the Difference between Mark Price and Last Price in the Context of Liquidation?

Glossar

Last Traded Price

Definition ⎊ Last traded price refers to the most recent price at which a financial instrument, such as a cryptocurrency, option, or future, was bought or sold on an exchange.

Mark Price

Valuation ⎊ The Mark Price within cryptocurrency derivatives represents a fair value estimation, calculated to mitigate price manipulation and ensure orderly market functioning, particularly during periods of low liquidity or volatility.