Mark Price

The fair market price used for margin calculations and liquidations to prevent manipulation.

What is Mark Price?

The mark price on a Perp DEX is a calculated price used to determine position values, margin requirements, and liquidations, designed to reflect the true market value of a digital asset. Unlike the spot price, which can be manipulated by large trades, the mark price often incorporates data from multiple sources, such as oracles or a time-weighted average of index prices, to ensure fairness. For instance, dYdX uses a mark price derived from Chainlink oracles to avoid flash crashes or spikes.

The mark price is critical for real-time position monitoring and preventing unfair liquidations in volatile markets. It differs from the index price, which tracks the underlying asset’s spot market value, by smoothing out short-term fluctuations. Traders rely on the mark price to gauge their position’s health and funding rate calculations.