What Is the Difference between a Time-Weighted Average Price (TWAP) and a Simple Spot Price?

A simple spot price is the current price of an asset at a single point in time. A Time-Weighted Average Price (TWAP) is the average price of an asset over a specified time interval.

DEXs often use a TWAP to calculate the mark price for liquidations, as it is less susceptible to temporary, manipulative price spikes than a simple spot price.