# Mark Price vs Index Price > Crypto derivatives use three prices: last, index and mark. Learn how each is calculated, why mark price triggers liquidations and why gaps between them matter. Source: https://learn.tradelabsai.com/crypto/mark-price-vs-index-price/ Track: Crypto · Level: Intermediate · Updated: 2026-10-03 Publisher: TradeLabs AI (https://tradelabsai.com). Education, not financial advice. Cite as: TradeLabs Learn, "Mark Price vs Index Price", https://learn.tradelabsai.com/crypto/mark-price-vs-index-price/ On crypto derivatives exchanges, there is not just one price. The last price is the most recent trade on that exchange. The index price is an average of spot prices from several major exchanges. The mark price is the exchange's estimate of fair value, used to calculate unrealised profit and loss and to trigger liquidations. Knowing the difference explains why your position can be liquidated even when the last price never touched your liquidation level, and why it sometimes is not when the last price briefly spikes through it. ## The three prices | Price | How it is set | Used for | |---|---|---| | Last price | Most recent trade on the exchange's order book | Charts, order fills, some stop triggers | | Index price | Weighted average of spot prices on several major exchanges | Reference for fair value and funding | | Mark price | Index price plus a smoothed basis or funding adjustment | Unrealised P&L, margin and liquidations | ## Index price The index combines spot prices from several large exchanges, often with rules to exclude outliers or venues that stop updating. This makes it hard to manipulate by trading on one exchange. If one constituent exchange shows an abnormal price, its weight may be reduced or removed. ## Mark price A common approach: ``` mark price = index price + moving average of (perp mid price - index price) ``` or the index price plus a funding basis that decays toward zero before each funding time. Either way, the mark price follows the index closely, smoothing short term spikes on the exchange's own order book. **Example: Why mark price matters** You are long ETH perps with a liquidation price of $2,900. A large market sell order on your exchange briefly knocks the last price down to $2,880 for two seconds, while ETH on other major exchanges stays near $2,980. The index and mark prices stay around $2,975, so you are not liquidated. If the exchange used last price, you would have been liquidated by a single trade. Conversely, if ETH falls steadily across all exchanges, the mark price falls too, and liquidation follows even if your exchange's order book lags. ## Which price triggers what | Event | Typically triggered by | |---|---| | Liquidation | Mark price | | Unrealised P&L display | Mark price | | Stop orders | Last price or mark price (often user selectable) | | Funding rate | Perp price compared with index price | | Settlement of dated futures | Index average at expiry | Choosing mark price for stop triggers avoids being stopped out by brief wicks on one exchange, but your stop may then fill at a different last price. ## When the prices diverge - **Thin order books:** small perps can trade far from the index during stress. - **Exchange specific events:** outages or withdrawal halts cause local prices to drift. - **Basis and funding:** perps trading at a premium or discount to spot. - **Index constituent problems:** if a source exchange fails, the index may need adjustment. ## Manipulation and protection Mark price systems were adopted after episodes where traders pushed a single exchange's price to trigger liquidations. Using a multi exchange index raises the cost of manipulation. However, low liquidity altcoins with few spot sources remain vulnerable, and exploits have occurred when index sources were thin. Similar issues arise in DeFi when protocols rely on manipulable price oracles. See [Oracles](https://learn.tradelabsai.com/crypto/oracles/) and [Market Manipulation](https://learn.tradelabsai.com/industry/market-manipulation/). ## Connection to prediction markets The same idea appears in Polymarket's short crypto rounds: what matters is the price source named in the rules, such as a Chainlink feed, not the last trade on any one exchange. Comparing prices from the wrong source can mislead you. See [Price to Beat and How Rounds Settle](https://learn.tradelabsai.com/prediction-markets/price-to-beat/). ## Frequently asked questions ### What is the difference between mark price and last price? Last price is the most recent trade on one exchange; mark price is a fair value estimate based on a multi exchange index, used for liquidations. ### Why do exchanges use mark price for liquidations? To prevent unfair liquidations caused by brief price spikes or manipulation on a single order book. ### What is an index price in crypto? A weighted average of spot prices across several major exchanges, used as a reference for fair value. Next, learn how traders earn funding and basis while staying neutral in [Funding and Basis Arbitrage](https://learn.tradelabsai.com/crypto/funding-and-basis-arbitrage/). ## Continue learning - Next lesson: [Funding and Basis Arbitrage](https://learn.tradelabsai.com/crypto/funding-and-basis-arbitrage/) - Previous lesson: [Insurance Funds and Auto-Deleveraging](https://learn.tradelabsai.com/crypto/auto-deleveraging/) - Related: [Insurance Funds and Auto-Deleveraging](https://learn.tradelabsai.com/crypto/auto-deleveraging/): Auto deleveraging closes profitable positions when liquidations cannot be absorbed. Learn how ADL works, how traders are ranked and how to reduce the risk. - Related: [Perpetual Futures](https://learn.tradelabsai.com/crypto/perpetual-futures/): Perpetual futures are crypto derivatives with no expiry, kept close to spot by funding payments. Learn how perps work, leverage, margin, funding and the main risks. - Related: [Liquidations in Crypto](https://learn.tradelabsai.com/crypto/liquidations-in-crypto/): A liquidation is the forced closing of a leveraged crypto position when margin runs out. Learn how liquidation prices work, cascades, heatmaps and how to avoid them. - Related: [Funding Rates](https://learn.tradelabsai.com/crypto/funding-rates/): Funding rates are periodic payments between longs and shorts on perpetual futures. Learn how they are calculated, what extreme funding means and how to use it. - Related: [Price to Beat and How Rounds Settle](https://learn.tradelabsai.com/prediction-markets/price-to-beat/): The price to beat is the start price an up or down round must match or beat for Up to win. Learn where it comes from and why it differs from your exchange. - Related: [Oracles](https://learn.tradelabsai.com/crypto/oracles/): Oracles bring outside data like prices and event results onto blockchains. Learn how Chainlink feeds and UMA's optimistic oracle work, and how attacks happen.