Mark Price

The Mark Price prevents unnecessary liquidations and accurately calculates unrealized profits and losses on platforms like Ebi. It is determined by considering various factors, such as the Last Price of the futures contract, the first bid and ask prices from the order book series, the funding rate, and a composite average of the spot price of the underlying asset on major crypto exchanges. By incorporating these factors, the Mark Price helps mitigate the impact of abnormal price fluctuations during volatile market conditions.

One of the primary uses of the Mark Price is for liquidations. When the Mark Price reaches the liquidation price of a position, it triggers a liquidation event. This mechanism protects users from unfair liquidations caused by short-term fluctuations in the Last Price, ensuring that the spot price of the asset has genuinely reached the liquidation level before triggering the event.

Additionally, the Mark Price serves as a reference point for calculating unrealized profits and losses. Since it may be challenging to determine the actual realized profit until a position is closed, using the Mark Price ensures accurate calculation of unrealized PnL. This accuracy is crucial in avoiding unnecessary liquidations based on incorrect PnL calculations.