Mark Price and Oracle Price

To ensure market integrity and prevent manipulation, TxFlow uses a dual-pricing system:

• Oracle Price — External reference price from major CEXs (used for funding rates and slippage protection)

• Mark Price — Fair value estimate for TxFlow's perpetual contracts (used for liquidations, PnL, and TP/SL triggers)

This separation ensures that liquidations and margin calculations are based on reliable, manipulation-resistant prices.

Oracle Price

The Oracle Price is the reference price for funding rate calculations and slippage protection. It is independent of TxFlow's order book, making it highly resistant to manipulation.

Key Characteristics

• Data Source: Weighted median of spot mid-prices from major, high-liquidity CEXs

• Update Frequency: Published by validators every ~3 seconds

• Use Cases:

  • Funding rate calculations

  • Slippage tolerance enforcement (market orders)

  • Base input for Mark Price

How It's Calculated

Oracle Price = Weighted Median(P1,P2,...,Pn)

Where:

• P₁, P₂, ..., Pₙ = Spot mid-prices from each CEX (e.g., Binance, Coinbase, OKX, Kraken)

• Weights = Based on each exchange's trading volume and data reliability

💡 Why Weighted Median? Unlike averages, medians are robust against outliers—even if one exchange reports an erroneous price, it won't skew the Oracle Price.

Mark Price

The Mark Price is an unbiased estimate of the fair perpetual contract price. It is used for:

• Liquidations — Determines when positions are liquidated

• Unrealized PnL — Calculates floating profit/loss

• Margin Calculations — Determines available margin

• TP/SL Triggers — Activates take-profit and stop-loss orders

Key Characteristics

• Data Source: Oracle Price + 30-second moving average of TxFlow's market premium

• Update Frequency: ~3 seconds (synced with Oracle Price updates)

• Purpose: Smooths out short-term volatility and prevents flash-crash liquidations

How It's Calculated

Mark Price = Oracle Price + Average Premium

Where:

Average premium in the last 30 seconds is calculated by sampling every second over a 30-second interval:

Moving average = Average of ((bid 1 + ask 1) ÷ 2 − Oracle Price)

And:

TxFlow Mid Price = (Best Bid+Best Ask) ÷ 2

💡 Why Include Premium? The premium reflects TxFlow's market sentiment (bullish/bearish relative to spot). Smoothing it over 30 seconds prevents manipulation via short-term order book spoofing.

Price Comparison

Feature	Oracle Price	Mark Price
Data Source	Spot mid-prices from major CEXs (Binance, Coinbase, OKX, etc.)	Oracle Price + TxFlow's market premium
Independence	Fully independent of TxFlow's order book	Incorporates TxFlow's market sentiment
Primary Use	Funding rate calculations, slippage protection	Liquidations, unrealized PnL, margin calculations, TP/SL triggers
Update Frequency	~3 seconds (validator-published)	~3 seconds (synced with Oracle updates)
Manipulation Resistance	High (external data, weighted median)	High (smoothed premium prevents outliers)

When Each Price is Used

Use Case	Price Used	Reason
Liquidations	Mark Price	Prevents manipulation; smooths volatility
Unrealized PnL	Mark Price	Fair valuation; matches liquidation price
Margin Requirements	Mark Price	Consistent with liquidation logic
Funding Rate Calculation	Oracle Price	Independent reference; prevents funding manipulation
Slippage Protection (Market Orders)	Oracle Price	Detects extreme execution prices vs. external reference
TP/SL Triggers	Mark Price	Consistent with PnL calculations

Related Pages

Pages	Description
Liquidation	Detailed liquidation mechanics
Funding	Funding fees