How Does the Mark Price Relate to the Liquidation Process? ⎊ Path

How Does the Mark Price Relate to the Liquidation Process?

The mark price is a more stable, average price derived from multiple sources, often including the spot price and the funding basis. It is used to calculate a trader's unrealized profit and loss (PnL) and to determine when liquidation should be triggered.

This prevents unnecessary liquidations that could occur due to temporary, artificial price spikes on the exchange's order book (last traded price).

Why Do Exchanges Use the Mark Price for PNL Calculation Instead of the Last Traded Price?

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

Why Is the Mark Price, Not the Last Traded Price, Used for Calculating the Funding Rate?

How Does the “Mark Price” Differ from the “Last Traded Price” in Perpetual Futures?

Does the Mark Price Ever Equal the Last Traded Price?

What Is the Difference between ‘Mark Price’ and ‘Last Price’ in Futures Trading?

Can a Trader Be Liquidated Based on Mark Price but Still Have a Positive P&L Based on Last Traded Price?

Why Is the Mark Price Crucial for Perpetual Contract Trading?

Glossar

Unrealized Profit and Loss

Valuation ⎊ Unrealized profit and loss within cryptocurrency, options, and derivatives represents the hypothetical gain or loss calculated based on the current market price of an asset or contract, contrasted with its initial cost basis.

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.