Technical Definition

Mark Price

The mark price is a reference price used by many crypto derivatives platforms to calculate unrealised PnL and determine whether leveraged positions should be liquidated. It may differ from the last traded price visible on the exchange.

By Crypto University Editorial
LiquidationPerpetual FuturesUnrealised PnL

✦ Key Insight

The mark price helps reduce unnecessary liquidations caused by temporary spikes or manipulation in an exchange’s last traded price. It is especially important for leveraged traders because liquidation may be based on the mark price rather than the most recent trade.

✕ Common Misconceptions

Watching only the last price

Assuming liquidation happens exactly when chart price touches the liquidation level

Ignoring exchange methodology

Confusing mark price with index price

Using excessive leverage near liquidation

Detailed Explanation

How It Works

An exchange may calculate mark price using:

  • An external spot index

  • A funding basis

  • Several reference exchanges

  • A smoothing formula

The exact method differs by platform.

The mark price is compared with a trader’s entry price to estimate unrealised profit or loss. It may also be used to determine whether margin has fallen below the maintenance requirement.

FAQs

Is mark price the price I trade at?
Not necessarily.

Why does my PnL differ from the chart?
Your exchange may calculate PnL using mark price.

Is mark price the same everywhere?
No. Each platform may use a different methodology.

In Practice

“A futures contract briefly trades at $99,000 because of a sudden order-book imbalance, while the broader market remains near $100,000. The exchange’s mark price may remain close to $100,000, helping avoid liquidating traders based only on the temporary price spike.”

Dig Deeper

Perpetual Futures

Perpetual Futures (Perps) Perpetual futures, often called perpetuals or perps, are derivative contracts that track the price of an underlying crypto asset without having a fixed expiry date.

Margin

Margin is the collateral a trader provides to open and maintain a leveraged trading position. It is not the same as the total value of the position.

Liquidation

Liquidation occurs when a leveraged trading platform forcibly reduces or closes a position because the trader no longer has enough margin to satisfy the required maintenance margin.