What Is 'Mark Price' and How Do Oracles Contribute to Its Calculation? ⎊ Path

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

The 'mark price' is an estimated fair price of a perpetual futures contract, designed to prevent unnecessary liquidations that can occur due to temporary market fluctuations or manipulation on a single exchange. Oracles contribute by providing the underlying asset's spot price, often averaged across multiple exchanges.

The mark price is typically calculated using this reliable oracle spot price combined with a decaying funding rate component.

What Is the Purpose of ‘Index Price’ in Derivatives Trading?

How Does the Mark Price Affect the Calculation of ‘Maintenance Margin’?

What Is the Difference between the Index Price and the Mark Price?

How Is the “Aggregated Price” Determined by an Oracle Network from Multiple Sources?

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

How Does a Large Deviation between Mark Price and Last Traded Price Trigger a Warning?

How Does the “Mark Price” Used in Perpetual Futures Differ from a Standard Oracle Price Feed?

Why Do Exchanges Use a “Mark Price” Instead of the Last Traded Price for Liquidations?

Glossar

Decaying Funding Rate

Mechanism ⎊ A decaying funding rate in cryptocurrency perpetual contracts represents a dynamic adjustment to the cost of holding a long or short position, designed to anchor the contract price to the underlying spot market.

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.