> For the complete documentation index, see [llms.txt](https://docs.fluvion.io/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.fluvion.io/perpetual-futures-mechanics/pricing-system.md).

# Pricing: Index, Mark & Last

To ensure fair execution, eliminate price manipulation, and protect traders from flash-wick liquidations, Fluvion employs a **3-Price Architecture**:

1. **Index Price**: The true spot market price aggregated across major global exchanges.
2. **Mark Price**: The smoothed fair-value price used for calculating unrealized PnL and evaluating liquidations.
3. **Last Price**: The most recent execution price on the Fluvion orderbook.

***

## 1. The Three Prices Compared

| Price Type      | Definition                                         | Primary Purpose                                          |           Susceptible to Manipulation?          |
| --------------- | -------------------------------------------------- | -------------------------------------------------------- | :---------------------------------------------: |
| **Index Price** | Volume-weighted spot price across tier-1 exchanges | Benchmark for fair market value and funding calculations |    **No** (Multi-exchange median safeguards)    |
| **Mark Price**  | Index Price combined with a moving average basis   | **Used for all margin and liquidation calculations**     | **No** (Resistant to single-venue manipulation) |
| **Last Price**  | Most recent fill on the local orderbook            | Reference for current order matching and tape display    |         Local orderbook depth dependent         |

> \[!IMPORTANT] **Liquidations on Fluvion are NEVER triggered by the Last Price.** Liquidations are evaluated strictly against the **Mark Price**. Even if a localized spike or large order sweeps the local orderbook, your position will not be liquidated unless the broader global spot market (Mark Price) moves through your liquidation threshold.

***

## 2. Index Price Calculation & Safeguards

The **Index Price** represents the volume-weighted average price (VWAP) of the underlying spot asset across leading global exchanges (e.g., Binance, OKX, Bybit, Coinbase).

### Outlier & Manipulation Filters

To prevent bad data, exchange API outages, or localized price manipulation from skewing the index, the oracle applies three layers of protection:

1. **±5% Deviation Band**:
   * If any single exchange's spot price deviates by more than **5%** from the median of all sources, that source is automatically capped or floored at **Median ± 5%**.
2. **Median Fallback**:
   * If multiple exchange sources exhibit significant divergence (exceeding 5%), the algorithm switches automatically from a volume-weighted average to the **Median Price** of all sources.
3. **Stale Source Exclusion**:
   * If an exchange stops sending updates or its feed experiences latency greater than **10 seconds**, it is dropped from the calculation until connectivity recovers.

### Exchange Weights

Source exchange weights are dynamically updated every 5 minutes based on their rolling 4-hour spot trading volume:

```
Weight_i = Volume_i / Total Volume across all sources
```

***

## 3. Mark Price Calculation

The **Mark Price** is calculated using the Index Price plus a decaying basis (the difference between the perpetual futures price and the spot index price), smoothed via an Exponential Moving Average (EMA):

```
Basis = Perp Fair Price - Index Price
Mark Price = Index Price + EMA(Basis)
```

### Why the Mark Price Matters:

* **Protects against predatory wicks**: Market manipulators cannot trigger cascading liquidations by dumping low-liquidity books.
* **Fair Unrealized PnL**: Prevents artificial swings in your account equity during brief spread widening.
* **Accurate Margin Evaluation**: Ensures system margin requirements reflect genuine global market conditions.

***

## 4. Last Traded Price

The **Last Traded Price** is simply the execution price of the most recent matched order on the Fluvion orderbook. It is reflected on the main chart candles and the recent trades feed.


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