{"id":73267,"date":"2025-11-20T13:00:52","date_gmt":"2025-11-20T07:30:52","guid":{"rendered":"https:\/\/mudrex.com\/blog\/?p=73267"},"modified":"2025-11-26T17:24:05","modified_gmt":"2025-11-26T11:54:05","slug":"understanding-mark-price-on-mudrex-futures","status":"publish","type":"post","link":"https:\/\/mudrex.com\/blog\/understanding-mark-price-on-mudrex-futures\/","title":{"rendered":"Understanding Mark Price on Mudrex Futures"},"content":{"rendered":"\n

What is Mark Price?<\/strong> <\/h2>\n\n\n\n

Mark Price is a \u201cfair\u201d reference price that Mudrex uses to calculate your unrealized P&L and to check whether your position should be liquidated. It\u2019s designed to be steadier than the last traded price so you\u2019re not punished by random spikes or thin-liquidity wicks. Liquidation checks on Mudrex are based on the Mark Price, not the last traded price. <\/p>\n\n\n\n

Think of Mark Price as a reasonable estimate of what an asset should<\/em> be worth right now. Instead of relying on a single exchange\u2019s last trade, which can swing a lot, Mark Price blends broader market data and, for perpetual swaps, small fairness adjustments. Mudrex uses this steadier number to show your unrealized profit or loss and to decide if your margin is still safe. <\/p>\n\n\n\n

Why not use the last traded price?<\/strong><\/h2>\n\n\n\n

The last traded price (LTP) can move suddenly when one big order hits or when the order book is thin for a few seconds. If we used LTP to check margin, a quick wick could liquidate good positions unfairly. Mark Price smooths out those jumps. That means your risk checks and P&L readouts are based on a price that\u2019s harder to manipulate and less erratic than a single trade print.<\/p>\n\n\n\n

What goes into Mark Price? <\/strong><\/h2>\n\n\n\n

Formulas differ slightly by platform, but the principle is consistent. Begin with a blended spot index\u2014a price constructed from multiple major exchanges\u2014and, for perpetual contracts, apply a modest funding\/basis adjustment that decays into the next funding time. The result is a fair-value estimate that closely tracks spot and is appropriate for risk checks and open P&L on Mudrex.<\/p>\n\n\n\n

Calculation of Mark Price<\/h2>\n\n\n\n

For perpetual contracts, you can think of Mark Price as the middle value (median)<\/strong> of three numbers:<\/p>\n\n\n\n

1) an index-plus-funding estimate, 2) an index-plus-short-term basis estimate, and 3) the last traded price.<\/p>\n\n\n\n

Written out:<\/p>\n\n\n\n

    \n
  • Mark Price = median( Price\u2081, Price\u2082, Last Traded Price )<\/strong><\/li>\n\n\n\n
  • Price\u2081 = Index Price \u00d7 [1 + Funding Rate \u00d7 (Time until next funding \u00f7 8)]<\/strong><\/li>\n\n\n\n
  • Price\u2082 = Index Price + (short-term basis moving average)<\/strong><\/li>\n<\/ul>\n\n\n\n

    Here, the short-term basis moving average<\/strong> is calculated from the order book midpoint \u2014 that is, (best bid+best ask) \u2014 minus the Index Price, averaged over about 2.5 minutes<\/strong>. In simple terms:<\/p>\n\n\n\n

      \n
    • the index<\/strong> anchors Mark Price to the broad spot market,<\/li>\n\n\n\n
    • the funding adjustment<\/strong> nudges perps toward spot, and<\/li>\n\n\n\n
    • the short-term basis average<\/strong> smooths brief swings.<\/li>\n<\/ul>\n\n\n\n

      Worked example<\/strong><\/p>\n\n\n\n

        \n
      • Index Price = $30,000<\/strong><\/li>\n\n\n\n
      • Funding Rate = 0.01%<\/strong> (0.0001)<\/li>\n\n\n\n
      • Time until next funding = 4 hours<\/strong> (half of an 8-hour cycle)<\/li>\n\n\n\n
      • Order book midpoint = $30,010<\/strong> \u2192 basis moving average = +$10<\/strong> (30,010 \u2212 30,000)<\/li>\n\n\n\n
      • Last Traded Price = $30,050<\/strong><\/li>\n<\/ul>\n\n\n\n

        Step 1: Price\u2081 = 30,000 <\/strong>\u00d7 [1 + (0.0001 \u00d7 4\/8)]<\/strong> = 30,001.5
        <\/strong>Step 2: Price\u2082 = 30,000 + 10 = 30,010
        <\/strong>Step 3: Mark Price = median(30,001.5, 30,010, 30,050) = 30,010<\/strong><\/p>\n\n\n\n

        So the Mark Price = $30,010<\/strong>, which is slightly different from the last trade. This is by design: it keeps risk checks and open P&L tied to a fair, stable reference rather than a single print.<\/p>\n\n\n\n

        How Mudrex uses Mark Price<\/strong><\/h2>\n\n\n\n

        On Mudrex, Mark Price drives two things you care about: the P&L you see while your trade is open, and the liquidation checks that protect your account from going negative. Your open P&L is computed against Mark Price so it doesn\u2019t whipsaw with every micro-move in LTP. More importantly, if your position gets into trouble, liquidation is triggered by Mark Price reaching your liquidation level<\/em>, not by a flash print on LTP. This helps prevent unfair stop-outs during brief volatility. <\/p>\n\n\n\n

        Two scenarios: Long vs. Short<\/strong><\/h2>\n\n\n\n

        Long example (BTC):<\/strong> You go long BTC at $60,000 with leverage. A sudden sell order on one venue briefly pushes the last traded price (LTP) to $57,500. The Mark Price built from broader market data only dips to $58,800. Mudrex uses $58,800 to show your unrealized P&L and to run liquidation checks, not the $57,500 wick. This helps prevent an unfair stop-out from a one-off spike. <\/p>\n\n\n\n

        Short example (ETH):<\/strong> You short ETH at $3,000. A quick squeeze prints an LTP of $3,090 for a few seconds, but the Mark Price rises only to $3,060. Your risk checks use $3,060, not the jumpy LTP, keeping margin decisions tied to a steadier, fairer reference. <\/p>\n\n\n\n

        How Mark Price, Liquidation Price, and Bankruptcy Price fit together<\/strong><\/h2>\n\n\n\n

        These three prices are related but do different jobs. Mark Price is the reference number used day-to-day for P&L and risk checks. Liquidation Price is the trigger level: when the Mark Price<\/em> touches this level, the platform begins liquidating your position to stop further loss. <\/p>\n\n\n\n

        Bankruptcy Price is the extreme end: it\u2019s the level at which your initial margin is fully consumed. When liquidation happens, the position is closed at or around the Bankruptcy Price. If the final close is better than bankruptcy, the leftover goes to the insurance fund; if it\u2019s worse, the insurance fund covers the gap. In short, Mark Price is the \u201cfair\u201d yardstick, Liquidation Price is the \u201cstart liquidating\u201d line, and Bankruptcy Price is the \u201cmargin fully used\u201d line. <\/p>\n","protected":false},"excerpt":{"rendered":"

        What is Mark Price? Mark Price is a \u201cfair\u201d reference price that Mudrex uses to calculate your unrealized P&L and to check whether your position should be liquidated. It\u2019s designed to be steadier than the last traded price so you\u2019re not punished by random spikes or thin-liquidity wicks. Liquidation checks on Mudrex are based on […]<\/p>\n","protected":false},"author":43,"featured_media":73183,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_eb_attr":"","footnotes":""},"categories":[2],"tags":[],"_links":{"self":[{"href":"https:\/\/mudrex.com\/blog\/wp-json\/wp\/v2\/posts\/73267"}],"collection":[{"href":"https:\/\/mudrex.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mudrex.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mudrex.com\/blog\/wp-json\/wp\/v2\/users\/43"}],"replies":[{"embeddable":true,"href":"https:\/\/mudrex.com\/blog\/wp-json\/wp\/v2\/comments?post=73267"}],"version-history":[{"count":6,"href":"https:\/\/mudrex.com\/blog\/wp-json\/wp\/v2\/posts\/73267\/revisions"}],"predecessor-version":[{"id":73297,"href":"https:\/\/mudrex.com\/blog\/wp-json\/wp\/v2\/posts\/73267\/revisions\/73297"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/mudrex.com\/blog\/wp-json\/wp\/v2\/media\/73183"}],"wp:attachment":[{"href":"https:\/\/mudrex.com\/blog\/wp-json\/wp\/v2\/media?parent=73267"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mudrex.com\/blog\/wp-json\/wp\/v2\/categories?post=73267"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mudrex.com\/blog\/wp-json\/wp\/v2\/tags?post=73267"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}