What is Mark Price in Binance Margin?

What is Mark Price in Binance Margin?

The enhancement introduces a moving average fair price (Mark Price) mechanism for borrow and withdrawal operations on Binance Margin accounts. This approach uses a range of recent index prices instead of a single spot price to better reflect the true market value and reduce the impact of temporary price spikes or anomalies.

Which Binance products are affected by this enhancement?

• Cross Margin Pro (CM Pro)
• Cross Margin Classic (CM Classic)
• Isolated Margin

What are the impacts?

• Borrowing will use a price between minMarkPrice and maxMarkPrice. (Please see the example below).
• Collateral value and liability calculations now incorporate the adjusted Mark Price. Specifically, the minimum mark price will be used for the user's other held tokens, while the maximum mark price will be used for the value of the user's borrowed currencies.
• Open order losses and initial margin requirements are recalculated based on the new Mark Price.

How is the Mark Price calculated?

• minMarkPrice = minimum of the current index price and the index prices over the last X hours.
• maxMarkPrice = maximum of the current index price and the index prices over the last X hours.
• The value of X may be dynamic and adjusted based on market conditions.

Calculation Example

Assuming a user holds 1,000 XYZ in the Cross Margin Classic and attempts to borrow ABC. Based on the maximum borrowing limit of Cross Margin Classic (CML>1.25).

• Before using Mark Price, user’s max borrow limit would be  6528 ABC. Calculation as the followings: 

（1,000*2.04*80%+6528*1）/（6528*1）= 1.25

• After using the Mark Price, the user's maximum borrowable amount is 6337.254902 ABC. Calculation as the followings:

（1,000*2.02*80%+6337.254902*1.02）/（6337.254902*1.02）= 1.25

In the calculation, the value of the user's other assets XYZ is calculated using the mini mark price, while the value of the user's attempted liability ABC is calculated using the max mark price.