What is the Mark Price? Understanding Mark Price and Its Function

Top.One uses a dual-price mechanism to protect users from losses due to market manipulation. Market manipulation can widen the gap between futures exchange prices and spot prices, leading to large-scale forced liquidations. Market manipulation not only causes investors to lose significant amounts of hard-earned wealth but also undermines the credibility of the cryptocurrency industry. Top.One places a high priority on creating a fair trading environment for all users, which is why we use a dual-price mechanism to prevent market manipulation.

The dual-price mechanism consists of the mark price and the latest transaction price.

Mark Price

For perpetual contracts, the mark price is defined as the global spot price index plus a decreasing funding cost basis rate. The mark price represents the real-time spot price of the contract on major exchanges. Top.One uses the mark price to set the trigger price for forced liquidation and to measure unrealized profit and loss, but it does not affect the trader's actual profit and loss. Only when the mark price reaches the trader's liquidation price will the trader's position be forcibly liquidated.

Mark Price Calculation

Mark Price = Median of (Price Level 1, Price Level 2, Latest Transaction Price) Price Level 1 = Index Price × [1 + Latest Funding Rate × (Time Until Next Funding Rate Collection / 8)] Price Level 2 = Index Price + 5-Minute Moving Average 5-Minute Moving Average = Moving Average [(Bid Price + Ask Price) / 2 − Index Price], sampled every second with a 5-minute interval.

In the following situations, Top.One will adjust the mark price calculation criteria:

• If any spot exchange index price is abnormal or data cannot be obtained, the mark price will be calculated based on the latest transaction price on the Top.One platform.

• If data needed for the 5-minute moving average calculation is insufficient due to factors like index price distortion, the mark price will be calculated based on the Top.One latest transaction price.

Note: — Top.One will use the optimal mark price to reduce the risk of positions being forcibly liquidated in volatile markets. — Top.One reserves the right to update the mark price calculation criteria in real-time according to market conditions. — The above calculations apply to mark prices under perpetual contract trading.

Latest Transaction Price

The latest transaction price refers to the current market price on Top.One. The dual-price mechanism reduces the price gap, maintains fairness in the trading environment, and protects traders from malicious forced liquidations.

Please note: During market volatility, the latest transaction price on Top.One may temporarily deviate from the mark price, potentially resulting in unrealized profit or loss after order execution. This should not be considered as actual profit or loss. Please closely monitor the difference between the liquidation price and the mark price.