Latest Transaction Price, Index Price, and Mark Price

1. Latest Transaction Price

The latest transaction price refers to the real-time price at which a contract is traded in the order book.

2. Index Price

The index price is calculated based on the weighted prices from at least three major exchanges, such as Binance, OKX, Coinbase, Bybit, and Huobi. It is the price that perpetual contract trading aims to track, and it is used for calculating the mark price.

3. Mark Price

The mark price is used to determine whether a position should be liquidated and to calculate unrealized profits and losses. The purpose of the mark price is to stabilize the contract market and reduce unnecessary liquidations during abnormal market volatility.

Mark Price Calculation Formula:

• Basis Moving Average = (BestAskPrice+BestBidPrice)2−IndexPrice\frac{(Best Ask Price + Best Bid Price)}{2} - Index Price2(BestAskPrice+BestBidPrice)​−IndexPrice over a specific time period.
• Mark Price = Index Price + Basis Moving Average.

The mark price smooths out short-term fluctuations in contract prices using a moving average mechanism, reducing the likelihood of unnecessary liquidations due to abnormal price volatility.

Hibt uses a uniquely designed Fair Price Marking System to avoid unnecessary liquidations in high-leverage products. Without this system, the mark price could deviate unnecessarily from the index price due to market manipulation or lack of liquidity, leading to undesired liquidations. This system ensures that the mark price is set based on the fair price, rather than the latest transaction price, thereby preventing unnecessary forced liquidations.

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