To improve the platform performance of AAX, and in the interest of our valuable customers, AAX is introducing the Mark Price methodology of calculating the liquidation price of futures contracts. This will serve to ensure a fairer liquidation price in the event of sudden changes in volume and will reduce the risk of liquidation and eliminate the impact of price manipulation.
The Index Price is calculated using a static average of futures contracts of up to seven crypto exchange platforms, including Binance, OKX, Bitstamp, Bittrex, Coinbase, Gemini, Kraken, Poloniex, and ItBit. It will be recalculated every 10 seconds to ensure the accuracy of our calculation.
Mark Price = Index Price * (1 + funding rate basis rate)
Funding rate basis rate = funding rate * (the time to pay the next funding cost / funding cost time interval)
Prior to introducing the Mark Price methodology, liquidation prices were calculated using the last trading price. To improve customer experience, AAX will use the Mark Price methodology, to calculate liquidation levels, which should also avoid premature liquidation in the case of abnormal fluctuations or manipulation.
The Mark Price will be shown under “Open Position” as below: