Mark Price
Fair price · Marking price · Mark
The price a futures exchange uses for unrealized profit and liquidations: a "fair price" built on an index of spot prices rather than the last trade.
Simple explanation
Background: Korea's won exchanges have no futures, so Korean traders meet the mark price only on overseas futures platforms such as Binance. On a Korean exchange, the "current price" on screen is simply the last trade.
A futures screen shows several prices. The last price is the latest trade on that futures market; the index price combines spot prices from several exchanges; and the mark price is the exchange's own estimate of fair value, built from those. Charts usually plot the last price, so a chart alone does not tell you where the mark price is.
There is a reason for a separate price. The last price can spike and snap back within seconds on one big order or a thin order book, leaving a long "wick" on the chart. Liquidating on that price would wipe out many positions over a momentary blip, and would tempt someone to push one market's price on purpose to trigger other people's liquidations. So most futures exchanges calculate unrealized profit and loss and liquidations on the mark price instead. Binance says it uses the mark price to prevent unnecessary liquidations and to discourage manipulation.
The mark price rests on the index price. For Binance's USDT-margined futures (USDⓈ-M), the index is a weighted average of spot prices from exchanges such as Binance, OKX, Coinbase, Kraken and Bybit, with some decentralized exchanges too. If one exchange's price strays from the median of all sources, it counts only up to a cap (usually 3%, and 1% for some coins such as bitcoin and ether), and an exchange that is disconnected or stale gets a weight of zero. Which exchanges are included varies by coin, and Binance can change them without notice.
On Binance's USDT-margined perpetuals, the mark price is the median of three values: (1) index price × (1 + last funding rate × time until the next funding ÷ funding interval); (2) index price + a 30-second moving average of the basis; and (3) the contract's own price. The basis average takes, every second, the midpoint of the best bid and ask minus the index price, and averages 30 of those readings. Because the middle value wins, one runaway input cannot drag the mark price with it, so the mark price stays close to the spot index while reflecting a little of the futures market's premium or discount (the basis). Other exchanges' formulas differ somewhat.
The mark price does three jobs. It values open positions (unrealized profit and loss); it decides liquidations, which happen when the mark price reaches the liquidation price; and it sizes funding payments, since Binance multiplies a position's notional value (mark price × quantity) by the funding rate. Realized profit and loss, when you close, uses the prices you actually traded at. That is why a chart of last prices can briefly cross your liquidation price without a liquidation, or show you short of it while the mark price has already got there.
It matters for stop orders too. On Binance futures you can choose whether a stop order triggers on the last price or the mark price (stop-limit orders default to the last price, stop-market orders to the mark price). Triggering on the mark price means watching the same price your liquidation uses, but the mark price is a calculated value, not a price you can trade at: once the order fires it fills at whatever the order book offers, which can be some way from the trigger.
The mark price is no shield against liquidation. It filters out a momentary spike on one market, but when spot prices fall together across exchanges, the index and the mark price fall with them and liquidations follow. Each exchange builds its index and formula differently, so the same coin at the same leverage can have slightly different mark prices and liquidation points on different platforms. The higher the leverage, the smaller the mark-price move needed to reach the liquidation price.
Korean won exchanges (Upbit, Bithumb, Coinone and Digital X, formerly Korbit) have no futures and so no mark price. The kimchi premium compares spot prices and is not worked out from a futures mark price; using one would shift the premium by the basis. If you hedge a premium trade with a short on overseas futures, remember that the spot price you sell at in Korea and the mark price that sets the short's profit and liquidation are two different prices. CoinGaja does not show mark prices; its "How CoinGaja calculates the premium" page explains which price its tables use (Binance's spot USDT market price).
Example
Index price $100,000, last funding rate +0.01%, 4 hours left of an 8-hour funding interval → (1) 100,000 × (1 + 0.0001 × 4 ÷ 8) = $100,005
30-second basis average +$20 → (2) 100,000 + 20 = $100,020
One big sell order briefly knocks the futures last price down to $90,000 (-10%) → (3) $90,000
Mark price = the median of the three = $100,005 → a 10x long of 0.1 BTC (margin $1,000, assumed 0.5% maintenance rate) with a liquidation price of about $90,500 is not liquidated
Unrealized profit on the mark price: (100,005 − 100,000) × 0.1 = +$0.50 / on the last price it would have been (90,000 − 100,000) × 0.1 = -$1,000, the whole margin
Funding = 100,005 × 0.1 BTC × 0.01% = about $1 (about ₩1,400) → the rate is positive, so this long pays it
※ Example numbers, for illustration only
See it on CoinGaja
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