The way the Mark Price is calculated is closely correlated with the funding rate and vice versa. We strongly recommend that you carefully read the two articles on "Mark Price" and "Funding Rate" to gain a full understanding of how the Futures trading system works.
As Unrealized PnL is the primary driver of liquidations, it's important to ensure that Unrealized PnL is accurately calculated in order to avoid unnecessary liquidations. The core basis of a Perpetual Contract is the intrinsic or "true" value of the Contract. The “Price Index,” which is the primary component of the Mark Price, is an average of the prices on the major mainstream markets.
The Price Index is a composite index derived from a basket of prices from various major Spot Market exchanges, weighted by their respective trading volumes. Referenced trading markets include: Binance, Huobi, Bittrex, HitBTC, Gate.io, Bitmax, Poloniex, FTX, and MXC.
As Position Exchange's Perpetual Trading Protocol is running fully on chain. We're using the mark price source from Chainlink, because it is currently the most battle-tested Oracle solution on the market.