To maintain the stability of the trading market and protect investors from unnecessary losses during market fluctuations, KCEX has introduced a mark price mechanism for its perpetual futures. This mechanism aims to reduce unnecessary forced liquidations during abnormal market volatility, protecting our trading environment from manipulation and insufficient liquidity.
Introduction to Mark Price Mechanism
The mark price is an important mechanism used to more accurately reflect the real value of a contract, helping to create a fairer and more transparent trading environment. This price mechanism is key to calculating the forced liquidation price and unrealized profit and loss but does not affect realized profit and loss. It's normal to see a temporary positive or negative unrealized profit and loss right after a trade due to slight differences between the mark price and the transaction price.
Calculation of Mark Price
KCEX uses the following method to calculate the mark price for its perpetual futures, ensuring accuracy and fairness:
Mark Price Calculation Formula: Uses the median of the funding rate premium, mid-price fair value, and the latest price.
Funding Rate Premium: Index price * (1 + latest funding rate * (time until next funding rate settlement / funding rate settlement period)).
Mid-Price Fair Value: Index price + moving average of the basis.
Moving Average of the Basis: Moving average of the period of (Buy Price 1 + Sell Price 1) / 2 - Index Price.
Commitments and Considerations
KCEX is committed to providing a fair and transparent trading environment for all users, reducing the risk of market manipulation, and preventing malicious forced liquidations through the mark price mechanism. We will adjust the calculation method of the mark price in real-time according to market conditions to ensure the fairness of trades.
Investors should note that during periods of significant market volatility, the latest transaction price may temporarily deviate from the mark price, potentially leading to unrealized profit and loss immediately after a transaction. We advise investors to pay close attention to the difference between the liquidation price and the mark price and trade cautiously.
We appreciate your choice of KCEX and look forward to providing you with quality service.