How Is the Mark Price of a Perpetual Contract Determined?

The Mark Price is an estimated fair price of the contract, distinct from the Last Traded Price. It is typically calculated using a formula that includes the Index Price and a decaying average of the Premium Index over a specific time period.

Its primary function is to prevent unnecessary liquidations due to temporary market spikes or illiquidity, as margin calculations are based on the more stable Mark Price, not the potentially volatile Last Traded Price.