For perpetual contracts, the Mark price refers to a global spot price index plus a decaying funding basis rate. Mark price can be considered as a price that reflects the real-time spot price on the major exchanges. Bybit uses Mark Price as a trigger for liquidation and to measure unrealized profit and loss, but this does not affect traders’ actual profit & loss. Only when the Mark price does reach the traders’ liquidation price is the traders’ position then liquidated.
Calculation of Mark Price
Last Traded Price
Last Traded Price is Bybit's current market price. When liquidation is triggered, the position will be liquidated according to the Last Traded Price. The Last Traded Price is always anchored to the spot price using the funding mechanism. This is why the price on Bybit is unlikely to deviate significantly from the spot market price.
In summary, with the Dual-Price Mechanism, it minimizes the price discrepancy and ensures a fairer trading environment, as well as protecting traders from malicious liquidation.
**Note: In a fluctuating market, Last Traded Price on Bybit may temporarily deviate from the Mark price. This may cause an immediate unrealized profit or loss right after order execution. Kindly note that this is not a real profit or loss but please be reminded to keep an eye on the distance between Liquidation Price and Mark Price. Additionally, traders may choose to enable the auto margin replenishment mode to manage the possibility of liquidation.