Mark Price: The average market price (Index Price) + a decaying Funding Basis.
Index Price: The average price index of a cryptocurrency on major exchanges.
The Index Price is derived from the average BTC/USD price index of major exchanges. On BTCMEX it is calculated equally from three exchanges Kraken, Coinbase, and Bitstamp (33.33% each).
Mark Price and Index Price are parts of the Dual-Price Mechanism - an important feature of a fair cryptocurrency exchange. Learn more about Dual-Price Mechanism on BTCMEX.
Liquidation on BTCMEX is triggered by the Mark Price, and not the Last Traded Price, which prevents wrongful Liquidations and internal market manipulations.
Mark Price calculation:
Mark Price = Index Price x (1 + Funding Basis)
Funding here refers to the periodic interest payments between traders which aim to keep the Last Traded Price on BTCMEX as close to the global Bitcoin price index as possible.
The Mark Price for a Perpetual Contract is calculated using only the Funding Basis:
Funding Basis = Index Price x Funding Rate x (Time Until Funding / Funding Interval)
Mark Price = Index Price x Funding Basis)
Both Mark Price and Index Price are displayed on the BTCMEX price chart.
BTCMEX Trading Codex - the most accurate definitions of Cryptocurrency Trading Terms