Fair Price Marking

BTEX employs a unique system called Fair Price Marking to avoid unnecessary liquidations in its highly leveraged products. Without this system, unnecessary liquidations may occur if the market is being manipulated, is illiquid, or the Mark Price swings unnecessarily relative to its Index Price. The system is able to achieve this by setting the Mark Price of the contract to the Fair Price instead of the Last Price.

For Perpetual Contracts, the Fair Price is equal to the underlying Index Price plus a decaying Funding basis rate.

All ADL contracts are subject to Fair Price Marking. Also note that Fair Price Marking only affects the Liquidation Price and Unrealised PNL, it does not affect Realised PNL.

Note: This means that you may see a positive or negative Unrealised PNL immediately after an order executes. This happens when the Fair Price is slightly different from the Last Price. This is normal and does not mean you have lost money, but be sure to keep an eye on your Liquidation Price to avoid a premature liquidation.

Calculation of Fair Price for Perpetual Contracts

The Fair Price for a Perpetual Contract is calculated using only the Funding Basis rate:

Funding Basis = Funding Rate * (Time Until Funding / Funding Interval)
Fair Price = Index Price * (1 + Funding Basis)