What Is Mark Price?
The mark price is designed to enhance market stability and reduce liquidations caused by abnormal volatility. It is also used to calculate unrealized profit and loss (PnL) for positions.
How is Mark Price Calculated
The mark price is determined by multiple market factors. Ultimately, it is set as the median of Price 1, Price 2, and the last fill price:
Mark Price = Median (Price 1, Price 2, Last Fill Price)
- Price 1 = Index Price × (1 + Funding Basis Rate)
- Funding Basis Rate = Funding Rate × (Time to Next Funding Payment / Funding Interval)
The funding basis rate is calculated using the current funding rate and the remaining time until the next funding settlement. For more details, refer to:
Funding Rate and Funding
- Price 2 = Spot Index + Moving Average Basis
- Moving Average Basis = Sum(Sampled Basis) / Number of Samples
- Basis = (Best Bid + Best Ask) / 2 – Index Price
The sampled basis is typically a set of basis values calculated every second over the past 5 minutes. Gate may flexibly adjust the sampling time window based on market volatility to ensure the mark price remains fair and is not subject to manipulation.
When the spot index components are deemed unreliable and no longer provide a meaningful reference for the contract price, the platform may rely primarily on in-contract quotes to determine the mark price.
To further prevent malicious market manipulation, the system will activate an instant mark price fluctuation protection mechanism for some markets. When the last mark price deviates significantly from the average price over the past several minutes, the mark price will stop updating and remain as the last quoted mark price. Updates will only resume once the calculated mark price, based on the above rules, returns to the level before the deviation. If the normally calculated mark price does not return within a certain period of time, the mark price will be gradually smoothed back to the normally calculated level.
Uses of the Mark Price
Unrealized PnL Calculation
Unrealized PnL (Long) = Number of Contracts × Contract Multiplier × (Mark Price – Entry Price)
Unrealized PnL (Short) = Number of Contracts × Contract Multiplier × (Entry Price – Mark Price)
Position Value Calculation
Position Value (USDT-M) = Number of Contracts × Contract Multiplier × Mark Price
Position Value (BTC-M) = Number of Contracts × Contract Multiplier / Mark Price
Margin Calculation
For details, refer to the Initial Margin Calculation and Maintenance Margin Calculation
Temporary Price Lock for Newly Launched Contracts
To avoid mass liquidations caused by extreme price surges in newly launched contracts, the platform may apply a temporary price lock to certain new contracts (by default, this mechanism is not enabled for newly launched contracts; if the platform decides to enable it for an upcoming contract, a separate announcement will be issued).
If a temporary price lock is enabled for a newly launched contract, then within the first hour after launch, when the value of (Latest mark price – Average Mark Price in the First 5 Minutes After Launch) / Average Mark Price in the First 5 Minutes After Launch > 10, the mark price will stop updating and remain as the last quoted mark price before the temporary price lock. At this point, the unrealized PnL of positions in that contract will be fixed at the value when the temporary price lock is activated.
During the temporary price lock, users can only reduce positions but cannot increase or open positions until the price lock is lifted by any of the following conditions, after which the mark price will resume normal updates, and normal trading will be restored. In the case of extreme market volatility, multiple temporary price lock events may occur within the first hour after launch.
Conditions for lifting the temporary price lock:
- When the real-time calculated mark price is less than or equal to the price lock level, the mark price will resume normal updates.
- If the real-time calculated mark price does not return to the price lock level within 10 minutes, the system will begin to smooth the mark price to the spot index price within 3 minutes, and then further smooth it to the normally calculated mark price (as defined above) within 1 minute.
Risk Warning
Futures trading carries substantial risk, particularly during periods of high price volatility. Significant differences may occur between the mark price and the last fill price. Since unrealized PnL is calculated using the mark price, the displayed PnL may not match the actual PnL settled when the position is closed. The mark price is for reference only, and the final PnL is based on the actual fill price.
Traders are advised to closely monitor the mark price, last price, and index price to avoid liquidation due to market fluctuations.
Gate reserves the final right to interpret the product.
For further assistance, please visit the Gate official support page or contact our customer support team.
