why mark price exists

you just entered the market.

the screen says the coin is worth $100, so it is natural to think $100 is the price.

but one large order can buy through the nearby sell orders and push the last traded price to $120.

that gives us two prices: the price of the most recent trade, and the price the exchange uses to evaluate a leveraged position.

the second one is called the mark price.

to see why it is useful, we can start with a small market where one large order is enough to move the displayed price.

green rows show people waiting to buy. those are bids. red rows show people waiting to sell. those are asks.

tap a green price to place a buy order. tap a red price to place a sell order.

the pink line on the chart is your order. when the market reaches that price, your order is filled.

so far, this is just a regular order.

futures let you trade based on a coin's price without owning the coin itself. perpetual futures, or perps, work in a similar way but do not have an expiry date. the position remains open until you close it or the exchange closes it.

if you expect the coin to go up, you take a long position.

you provide some cash of your own. with leverage, the exchange lends you more so you can control a larger position. that borrowed amount is what makes the gain or loss larger.

with cash only, a 5% move in the coin is a 5% change in your position. at 20× leverage, your $100 and $1,900 borrowed from the exchange give you $2,000 of exposure. then a 5% move changes your cash by about 100%, either up or down.

if the coin moves far enough in the wrong direction, the exchange closes the position to recover its loan. the price where this happens is the liquidation price. your original cash can be lost.

if you expect the coin to go down, you take a short position.

the same leverage applies, but the position loses when the coin price rises.

the idea is the same, with the direction reversed. if the coin rises to the liquidation price, the exchange closes the position and your cash can be lost.

//how the displayed price can be moved

the last price is the price of the most recent trade.

if there are not many sell orders nearby, one large buyer can purchase them one by one and move the last price much higher.

other traders may continue buying and selling at normal prices. each trade still has two sides: one person buys and another person sells.

the terminal below is the same live X-USD market. tap let a large buyer buy to thin the book, then watch one wallet take every seller. volume bars show how much bigger those buys are.

the coin did not necessarily become 20% more valuable. the large buyer moved the last traded price because there were not many sell orders nearby. other traders may then follow that price.

if the exchange used the last price alone to decide when to close positions, someone could try to:

1. find a market with little activity
2. place large orders to move the last price
3. cause nearby leveraged positions to be closed

//why anyone would bother

moving a price costs money. the whale in that terminal paid above the market on purpose, again and again. so it is worth asking what it was buying.

not the coin.

the direction does not matter much either. a move up hurts shorts, a move down hurts longs. the terminal above pushed up. the rest of this section pushes down, because longs are usually the crowded side.

a leveraged position has a floor under it, and you have already seen the floor: the liquidation price. when the price touches it, the exchange closes the position. nobody decides that in the moment. it is a rule.

the floor is not a secret either. leverage decides where it sits.

at 3× the floor is a third of the market away, and nothing anyone can buy will reach it. at 40× it is a normal candle.

so a market full of leverage has a shape. not the shape on the chart, the shape underneath it: a stack of positions, each one carrying a price where it has to be closed.

here is the part that changes the incentive.

a liquidated long is not a person deciding to sell. it is the exchange selling at market, at whatever price it can get, to recover its loan. that selling pushes the price lower. lower can reach the next floor.

so the whale does not need to move the price far. it needs to move it just far enough to touch the first floor. the floors do the rest, and they do it for free.

try a small push first. the price dips, nothing is forced to sell, sellers come back, and the whale paid the slippage for nothing. then push far enough to reach the first floor.

that is the whole trade. you pay for the first two or three dollars of the fall. other people's positions pay for the rest.

a stop-loss behaves the same way as a liquidation here. it is a promise to sell at a price, and touching the price turns it into a market order.

there is a quieter version of this too. if you are holding a large bag and nobody nearby wants to buy it, a rising last price produces people who do.

notice what none of this needs.

none of it needs the coin to be worth more or less than it was a minute ago. it only needs the number on the screen to touch a level.

so that is the weakness worth naming: one trade should not be able to decide what your position is worth.

this is why exchanges use another reference price when managing leveraged positions.

//mark price

the last price tells you:

"

someone just traded here.

the mark price is an estimate that uses more information than that single trade.

on Hyperliquid, the mark price is calculated from three values:

1. an oracle price from other spot markets, adjusted gradually toward Hyperliquid's own market
2. the middle of Hyperliquid's best buy, best sell, and last trade prices
3. a weighted median of perp mid prices from Binance, OKX, Bybit, Hyperliquid, and Gate.io

for the third value, each venue has a different weight:

• Binance: 3
• OKX: 2
• Bybit: 2
• Hyperliquid: 1
• Gate.io: 1

a perp mid price is halfway between the best buy and best sell prices on that market. the exchange sorts the five mid prices and counts their weights. the price that crosses the halfway point becomes this input.

this is one of the three values used to calculate the mark price. the other two come from Hyperliquid's oracle and its own market.

if one venue reports an unusually high price, the weighted median may stay closer to the other venues.

the last price changed, but the reference used for your position did not move as much.

//why your position cares

mark price is used to decide:

• whether your position stays open
• whether the exchange closes it
• whether take-profit or stop-loss orders trigger
• what profit or loss to show you

your position is not supposed to be closed just because a single unusual trade changed the last price. similarly, seeing a higher last price does not by itself mean your position can be closed for that amount.

on Hyperliquid, the oracle price and mark price update about every three seconds. mark price follows the wider market, but does not rely on one trade from one exchange.

if the whole market moves, mark price moves too. it is a more stable reference for managing your position.

if you are long X coin at 20x, this is the price the exchange uses to check whether your position can remain open.

there are two prices to keep in mind:

the last price, based on the latest trade, and the mark price, used for your position.

they can be different, and both have a purpose.