Bybit uses the Dual-Price mechanism to prevent traders from falling victim to market manipulations.
Due to market manipulations, the market price on a futures exchange may deviate significantly from the spot price, resulting in a mass liquidation of traders’ positions. In addition to costing traders large amounts of their hard-earned money, market manipulations also destroy the general public’s confidence in the entire crypto exchange industry. Bybit’s top priority is to provide a fair trading environment to all traders, which is why we employ a Dual price mechanism to prevent market manipulations.
Dual Price Mechanism consists of Mark Price & Last Traded Price.
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. 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.