Why Is the Mark Price Used in the Funding Rate Calculation Instead of the Last Traded Price?

The Mark Price is used because it is a more stable and less manipulable representation of the contract's fair value than the Last Traded Price. The Last Traded Price can be subject to temporary spikes or drops due to single large orders.

Using the Mark Price, which is often smoothed with the Index Price, ensures the funding rate accurately reflects the sustained premium or discount.