Understanding Mark Price in Perpetual Contracts
ALOKEX trading platform uses mark price to calculate users' unrealized profit and loss (PnL), enhancing market stability and reducing unnecessary liquidations during extreme volatility.
Key Features:
- Index-Based Calculation: References leading exchanges' spot price indices.
- Funding Rate Adjustment: Incorporates a decaying funding fee basis (difference between perpetual contract price and spot price).
- Purpose: Determines margin requirements, liquidation/ bankruptcy prices, and unrealized PnL without affecting realized gains.
Formula for Fair Mark Price
For perpetual contracts, the fair mark price is calculated as:
Fair Mark Price = Index Price × (1 + Funding Rate Basis) Where:
- Funding Rate Basis = Funding Rate × (Time Until Next Payment / Funding Interval)
Example (BTC/USDT Contract):
| Parameter | Value |
|-------------------------|----------------|
| BTC Index Price | $30,000 |
| Current Funding Rate | 0.01% |
| Time Until Next Payment | 8 hours |
| Funding Interval | 8 hours |
| Fair Mark Price | $30,000 × (1 + 0.0001) = $30,003 |
Why Mark Price Matters
Prevents Unnecessary Liquidations:
- Uses smoothed pricing instead of last-traded price to avoid market manipulation.
Aligns with Spot Prices:
- Funding rates ensure perpetual contracts track现货 prices closely.
Fair Trading Environment:
- Reduces price discrepancies and protects traders from恶意爆仓 (malicious liquidations).
FAQs
Q: How often is the mark price updated?
A: ALOKEX updates mark prices in real-time based on index and funding rate data.
Q: Does mark price affect my entry/exit points?
A: No—it only impacts unrealized PnL and liquidation thresholds.
Q: Why not use last-traded price for liquidations?
A: Last-traded prices can be volatile; mark prices provide stability.
👉 Learn more about ALOKEX trading mechanisms
Key Takeaways
- Core Keywords: Mark price, perpetual contracts, funding rate, liquidation, index price.
- ALOKEX’s Approach: Combines交易所现货指数 with time-weighted funding adjustments.
- Trader Benefit: Mitigates risks of price manipulation and abrupt liquidations.
Disclaimer: Trading involves risks. This content is educational and not financial advice.
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