What's the difference between Oracle machine price, index price, marked price and latest transaction price?

Published on Jul 14, 2023Updated on Apr 4, 20242 min read

Oracle Price

The Oracle price is a crucial component of OKX's decentralized perpetual swap, and consists of two parts: the index price and the mark price. The Oracle price is calculated and provided by Stork, a third-party network that aggregates data from multiple sources to ensure accuracy and reliability.

Index Price

The index price is a key component of the Oracle price, and is derived from the median of the data nodes from the four Stork networks. The index price of each Stork network is calculated from coin pairs of several major exchanges, which are used as index weighting components.

Uses of Index Price:
It reduces price volatility and market manipulation, and ensures that index price accurately reflects the fair spot price.

Components of Index Price
All components of the index prices are originated from trading markets of mainstream exchanges, including Binance, OKX, Coinbase, Kraken, etc. They are converted to USDC based on the current exchange rate.

Mark Price

Mark price is being used to calculate users' Unrealized Profit and Loss (UPL). And act as a tool to enhance stability of contracts market and reduce unnecessary forced liquidation in an abnormal volatile market.

Mark Price Calculation
Mark Price = Median (Price 1, Price 2, Last Traded Price)
Where:

  • Price 1 = Index Price * (1 + Last Funding Rate * (Duration till next funding rate) / 1 hour)
  • Price 2 = Index Price + Basis of Moving Average (5 minutes)
    • Basis of Moving Average (5 minutes) = [(Best Ask Price + Best Bid Price) / 2 - Index price]
      Value to be recorded each minute in an interval of 5 minutes.
  • The Last Traded Price is the current market price of OKX's decentralized perpetual swaps.

Note
In times of high market volatility, the last traded price may temporarily deviate from the mark price, which may result in an UPL after an order has been executed. It's important to note that this may not be the actual Profit and Loss (P&L) of the trader.