Mark Price
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Key Takeaway
The price used to calculate unrealized profit/loss and trigger liquidations on a perpetual futures contract; derived from the index price with a short-term basis adjustment to prevent single-trade manipulation from triggering mass liquidations.
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What Is Mark Price?
The price used to calculate unrealized profit/loss and trigger liquidations on a perpetual futures contract; derived from the index price with a short-term basis adjustment to prevent single-trade manipulation from triggering mass liquidations.
How Mark Price Works
Frequently Asked Questions
What is the mark price in simple terms?
The mark price is the 'official' price that a crypto exchange uses to decide whether your position should be liquidated and to calculate your unrealized profit or loss. It is not the last price someone paid on that exchange — it is a smoothed price calculated from the average spot price across multiple major exchanges, with a small adjustment for the typical premium or discount of the perpetual futures contract. This design means a single large trade or brief price spike cannot move the mark price enough to trigger mass liquidations across the market.
How does mark price work in perpetual futures markets?
Mark price is calculated as the index price — a weighted average of spot prices from multiple major exchanges like Binance, Coinbase, and Kraken — plus a smoothed basis adjustment reflecting the perpetual's typical premium or discount. The exchange updates this calculation continuously. When a trader's position margin falls below the maintenance threshold based on the mark price, the exchange liquidates the position automatically. Because mark price depends on a basket of spot exchanges rather than a single venue's order book, it resists manipulation by large single orders.
How do traders use mark price to make better decisions?
Traders apply mark price awareness in three ways: (1) Know your liquidation price — it is always displayed in your position panel as a mark price level, not a chart price; check it before entering and after adding to a position. (2) Interpret liquidation events accurately — when price spikes but fewer liquidations than expected occur, the mark price likely did not reach those levels; the visible wick was on last-traded price only. (3) Monitor mark price divergence during low-liquidity hours — when mark and last-traded diverge significantly, the exchange's P&L calculation may differ from what your chart shows.
Common Misconceptions About Mark Price
A wick on the chart to my liquidation level means I will be liquidated
Liquidations are triggered by the mark price, not the last-traded price visible on the chart. If a price spike occurs on the exchange's own order book but the mark price — derived from the multi-exchange index price — does not reach your liquidation threshold, your position remains open. Chart wicks can extend well beyond where the mark price traveled during the same period. Always check your position panel's displayed liquidation price, which reflects the mark price calculation, not the chart's price scale.
Mark price and last-traded price are always very close to each other
During normal market hours and high liquidity, mark price and last-traded price are typically within a small fraction of a percent of each other. However, during low-liquidity periods — such as weekend nights or immediately following major news events — the two can diverge by a meaningful amount. A large order hitting a thin order book can move last-traded price sharply while the mark price, smoothed across multiple exchanges, moves far less. This divergence is precisely the situation the mark price was designed to handle.
Exchanges can manipulate the mark price to trigger liquidations
The mark price's multi-exchange construction is specifically designed to prevent exchange-level manipulation. Because it is based on spot prices from multiple independent venues — not just the exchange's own order book — a single exchange would need to simultaneously manipulate the spot price across Binance, Coinbase, Kraken, and other major venues to meaningfully move the mark price. This is economically impractical. The mark price methodology is also published publicly, allowing independent verification of its calculation.