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.
Related Terms
Margin Trading
A trading strategy in digital assets where investors borrow funds to amplify position sizes, increasing potential profits and losses through leverage ratios like 2x or 5x.
Liquidity Fragmentation
The dispersion of liquidity across multiple pools, chains, or exchanges, leading to inefficient pricing and higher costs.
Market Cap
The total value of a digital asset’s circulating supply, calculated by multiplying its current price by the number of coins or tokens in circulation.
Merkle Tree
A binary tree data structure used to efficiently verify and summarize large sets of data, such as transactions in a blockchain.
Mining and Miner
Mining is the process of validating transactions and adding new blocks to a blockchain by solving computational puzzles, and a miner is who performs this task to earn rewards.
Meme on Solana
Humorous digital assets on the Solana blockchain, often inspired by internet memes, leveraging low fees and high speed for rapid launches and trading.