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

The Mark Price is a stable, manipulation-resistant fair value estimate, preventing a single trade from unfairly skewing the funding rate calculation.
Greeks.Live24.11.25

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

The Mark Price is used because it is a stable, index-derived estimate of the contract's true fair value, making it resistant to temporary price manipulation. Using the volatile Last Traded Price would allow a single large trade to briefly skew the funding rate calculation, creating opportunities for manipulation.

The Mark Price ensures the funding rate reflects a genuine, sustainable deviation from the underlying spot market.

How Does the Exchange Calculate a Position’s Unrealized P&L Using the Mark Price?
What Is the Difference between Mark Price and Last Traded Price?
Why Is a Multi-Exchange Index Price Preferred over a Single Spot Price for Calculating Margin Requirements?
Can a Trader Be Liquidated Based on Mark Price but Still Have a Positive P&L Based on Last Traded Price?

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