Key Takeaways
- • MEXC Futures employs a median-based fair price calculation methodology that combines funding rate premiums, mid-price basis, and last transaction price to mitigate liquidation risk and smooth short-term volatility.
- • Fair price is calculated using the formula: Median (Funding Rate Premium, Mid-Price Basis Fair Price, Last Price), where Funding Rate Premium = Index Price × [1 + Latest Funding Rate × (Hours Until Next Funding Settlement / Funding Settlement Period in Hours)].
- • The fair price mechanism determines unrealized profit/loss (PNL) calculations and protects traders from unnecessary liquidations triggered by temporary market swings on individual exchanges.
- • Mid-Price Basis Fair Price incorporates the moving average of the spread between best bid/ask midpoint and index price, ensuring fair price reflects broader market trends rather than single-exchange volatility.
- • MEXC positions itself as a low-fee perpetual futures platform, with fair price methodology designed to align derivative pricing with true underlying asset value while reducing trader liquidation exposure.
Summary
MEXC Futures has developed a systematic fair price calculation methodology designed to protect traders from liquidation events caused by temporary market volatility while ensuring accurate profit/loss accounting. The fair price framework serves as the primary valuation mechanism for unrealized PNL determination and liquidation triggers, distinguishing it from the "last price"—the most recent transaction price—which can be subject to sharp intraday swings.
The fair price is calculated using a median function across three components. The first component, Funding Rate Premium, adjusts the index price based on the latest funding rate and the time remaining until the next funding settlement event. The second component, Mid-Price Basis Fair Price, adds a moving average of the basis (the spread between the midpoint of best bid/ask prices and the index price) to the index price itself. The third component is simply the last executed transaction price. By taking the median of these three values, MEXC's methodology avoids overweighting any single input during periods of elevated volatility.
This tri-factor approach addresses a critical vulnerability in derivatives markets: reliance solely on last transaction price can trigger cascade liquidations during volatile periods even when underlying asset values remain stable. By incorporating funding rate dynamics and market microstructure (bid/ask spread basis), MEXC's fair price mechanism anchors valuations to broader market consensus rather than allowing isolated large trades to artificially trigger forced liquidations. The use of a moving average for the basis component further smooths temporary dislocations.
The fair price calculation reflects MEXC's positioning as a trader-protection-focused platform within the perpetual futures segment. By accurately measuring unrealized PNL and setting liquidation thresholds against a volatility-adjusted metric, the exchange reduces unnecessary account closures and positions itself competitively on risk management within a low-fee operating model. This methodology applies uniformly across MEXC's futures products, including INDEX USDT, SKYHIX USD1, and CP USDT contracts.
The fair price is calculated using a median function across three components. The first component, Funding Rate Premium, adjusts the index price based on the latest funding rate and the time remaining until the next funding settlement event. The second component, Mid-Price Basis Fair Price, adds a moving average of the basis (the spread between the midpoint of best bid/ask prices and the index price) to the index price itself. The third component is simply the last executed transaction price. By taking the median of these three values, MEXC's methodology avoids overweighting any single input during periods of elevated volatility.
This tri-factor approach addresses a critical vulnerability in derivatives markets: reliance solely on last transaction price can trigger cascade liquidations during volatile periods even when underlying asset values remain stable. By incorporating funding rate dynamics and market microstructure (bid/ask spread basis), MEXC's fair price mechanism anchors valuations to broader market consensus rather than allowing isolated large trades to artificially trigger forced liquidations. The use of a moving average for the basis component further smooths temporary dislocations.
The fair price calculation reflects MEXC's positioning as a trader-protection-focused platform within the perpetual futures segment. By accurately measuring unrealized PNL and setting liquidation thresholds against a volatility-adjusted metric, the exchange reduces unnecessary account closures and positions itself competitively on risk management within a low-fee operating model. This methodology applies uniformly across MEXC's futures products, including INDEX USDT, SKYHIX USD1, and CP USDT contracts.
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