What Role Does ‘Mark Price’ Play in Margin and Liquidation?

The mark price is a fair price calculation used by the exchange to determine a position's unrealized profit and loss (PnL) and, crucially, to calculate the margin level. It is typically a composite price derived from the spot price and the contract's moving average, designed to prevent manipulation from temporary spikes in the last traded price.

Liquidation is triggered when the mark price causes the margin level to fall too low.