The dual-price mechanism include: 1. The mark price (fair price) 2. The last traded price
What is the mark price?
Mark Price = Index Price + Funding Basis
Mark price can effectively avoid large deviation between the price of contract market and the spot price, which is caused by the lack of contract market liquidity. It provides a fair and transparent trading environment.
Two main functions of the mark price:
- To calculate the unrealized profits and loss (PNL)
- As the trigger for liquidation
What is the index price?
The index price is calculated from the latest market prices of the major spot markets:
- BitForex BTC, ETH, LTC, Perpetual Contract Index prices are taken from the latest spot prices of the four exchanges: BitStamp, CoinbasePro, GEMINI, Kraken;
- BitForex BCH Perpetual Contract Index prices are taken from the latest spot prices of the three exchanges: Binance, CoinbasePro, and OKCoin;
- BitForex TRX Perpetual Contract Index prices are taken from the latest spot prices of the four exchanges: Binance, BitForex, Huobi, OKCoin;
- BitForex EOS Perpetual Contract Index prices are taken from the latest spot prices of the four exchanges: Binance, Bitfinex, Huobi, OKCoin;
- BitForex XRP Perpetual Contract Index prices are taken from the latest spot prices of the two exchanges: BitStamp and OKEx;
- BitForex BSV Perpetual Contract Index prices are taken from the latest spot prices of the four exchanges: BitForex, Hitbtc, Huobi, OKCoin;
- BitForex BEAM Perpetual Contract Index prices are taken from the latest spot prices of the three exchanges: Binance, BitForex, Gate;
- BitForex GRIN Perpetual Contract Index prices are taken from the latest spot prices of the three exchanges: BitForex, Gate, Poloniex;
- BitForex ATOM Perpetual Contract Index prices are taken from the latest spot prices of the four exchanges: BitForex, Hitbtc, Huobi, OKCoin;
- The price of BitForex BNB perpetual contract index is taken from the four exchanges: Binance, BitForex, Gate, and Kucoin.
BitForex uses a dual price mechanism to protect the fairness of the contract market and avoid the risk of a trader's position being liquidated due to abnormal market volatility.
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