In Echobit Perpetual Futures, Mark Price and Index Price are important reference prices used for risk control and order execution logic. Understanding how they work can help you better manage liquidation risk and interpret unrealized PnL.
Mark Price
1.1 What Is Mark Price?
Mark Price is a key reference price used for:
- Forced liquidation (liquidation is triggered based on Mark Price rather than Last Price in many cases)
- Calculating unrealized PnL (floating profit/loss)
Note: Realized PnL is still based on the actual executed price of your trades.
Mark Price is designed to better reflect the contract’s “fair value” and to reduce unnecessary liquidations caused by short-term spikes or manipulation in the last traded price.
1.2 Mark Price Formula (Perpetual Futures)
Mark Price is calculated as the median of three values:
Mark Price = Median ( Price 1, Price 2, Last Price )
Where:
- Price 1 = Index Price
- Price 2 = Index Price + 5-Minute Moving Average (MA)
The 5-minute moving average is:
- It is calculated on a 5-minute basis
- The value is updated every second
Median rule example:
If Price 1 < Price 2 < Last Price, then Price 2 is used as the Mark Price.
1.3 Protective Measures in Extreme Conditions
In extreme market conditions or if there are deviations in price sources that cause Mark Price to deviate abnormally from the spot market, Echobit may apply additional protections, such as:
- Setting Mark Price = Price 2 in such scenarios
1.4 During System Upgrade or Trading Suspension
If Echobit is undergoing a system upgrade or downtime that suspends trading activities:
- The Mark Price formula remains the same
- The Moving Average (5-minute basis) component in Price 2 is set to 0 until the system returns to normal
Index Price
2.1 What Is Index Price?
Index Price is a composite reference price built from prices across multiple external exchanges to improve stability and reduce price deviation.
Echobit may continuously adjust its index references by adding or removing exchanges based on actual conditions to keep the index robust.
2.2 Index Price Calculation Rules (Notes)
Echobit uses the following principles when calculating Index Price:
-
If multiple pairs exist for the same underlying asset on the same exchange, Echobit will use only one pair:
- Priority: USDT-margined
- If not available: USDC- or USD-margined
- Each external exchange included in the index uses equal weighting.
- If an external exchange’s data timestamp is more than 5 seconds earlier or later than Echobit’s system time, that exchange’s data will be ignored for that calculation cycle.
- Each time Index Price is updated, Mark Price is also updated.
- If the deviation between an external exchange’s last price and the median of all referenced exchange prices is ≥ 3%, that exchange will be excluded from the index calculation.
2.3 Example: Calculating BTC/USDT Index Price
Assume Echobit references 9 external exchanges and their latest BTC prices are:
$$P_1, P_2, ..., P_9$$
Steps:
Echobit Official Channels
Website: http://echobit.com/
Linktree: https://linktr.ee/Echobit_Exchange
Twitter: https://x.com/EchobitExchange
Telegram: https://t.me/EchobitOfficial
Facebook: https://www.facebook.com/EchobitOffical
Risk Disclaimer
Cryptocurrency investments are subject to high market risk and price volatility. You should only invest in products that you are familiar with and fully understand the associated risks.
Before making any investment decisions, please carefully assess your investment experience, financial situation, investment objectives, and risk tolerance, and consider seeking advice from an independent financial advisor.
The information provided in this document is for informational purposes only and should not be considered financial, investment, or trading advice. Past performance is not indicative of future results. The value of your investments may fluctuate, and you may lose part or all of your invested capital.
You are solely responsible for your investment decisions. Echobit shall not be liable for any losses or damages arising from your investment activities.