Fair Mark Price

1.Fair Price definition

 

Coin8 is designed to fully consider the possibility of malicious market manipulation. Therefore, we will use a unique Fair Price Marking mechanism to prevent users from falling victim to the manipulations, and to ensure a fair trading ecosystem for all our valued users.

 

Due to the characteristics of high volatility and possible limited liquidity from time to time of cryptocurrency market, malicious market manipulations, such as pump & dump schemes, occur regularly on exchanges. If a derivatives exchange uses Last Traded Price as mark price to calculate unrealized PNL and to trigger liquidation, unnecessary liquidations might happen due to the manipulations. Therefore, on Coin8, instead of Last Traded Price, Fair Price is calculated based on the weighted average of latest prices from mainstream spot exchanges, like Binance, Huobi and Okex, and is used as Mark Price to calculate the unrealized PNL and to decide when to trigger liquidation. Liquidation will only be triggered when the Fair Price hits the Liquidation Price.

 

Mark price is used to determine whether it will be liquidated or not, not to calculate realized profit and loss（ Note that when your open position order is completed, you may immediately see a positive or negative unrealized profit or loss. The reason is that there is a difference between the mark price and the last price, which does not mean that there is a real loss. But we need to pay attention to estimate the liquidation price and mark price reasonably, so as not to be liquidated too early.

 

For the introduction of index, please pay attention to the introduction of index.

 

2.Fair priceformula

 

Index price = external fair price

Mark price = index price * (1 + )

funding rate basis = Funding rate of the previous period * (the remaining time from the settlement of the next period / 8 hours)

 

3.Index exception handling

 

For exception handling of index, please pay attention to the introduction of index

 

4.Application of Fair price

 

Unrealized profit and loss calculation:

 

USDT-Margined contract:

 

Unrealized profit and loss = position side X contract value x size of closed positions x (Mark price- entry price)

• Position side for long is 1, for short position is - 1

Funding Fee: The mark price is used to calculate the funding rate. Please pay attention to the funding rate for details.