Spot Prices

Explanation of reasonable spot prices

In order to improve the stability of the market for contracts and to reduce unnecessary forced liquidations in the event of unusual market volatility, the MEME trading platform uses spot prices to calculate users' unrealized gains and losses. The spot price is based on the head exchange spot price index plus a declining capital charge spread, i.e. the price reflects the real-time spot price on the major exchanges.

The spot price is used by MEME to calculate the reasonable equity of the account as a criteria to collect margin and to calculate the liquidation and breakeven prices. The spot price is set to a reasonable price rather than the latest traded price, thus avoiding unnecessary closures. The spot price only affects the liquidation price and the unrealized profit and losses, but not the realized profit and losses.

For perpetual contracts, a reasonable spot price is equal to the price of the underlying index plus a decreasing funding spread over time.

Calculating a reasonable spot price for a perpetual contract

A reasonable spot price for a perpetual contract is calculated using the funding cost basis ratio:

Funding Fee Basis Ratio = Funding Fee Rate * (Time until next funding fee payment / Funding Fee Interval)

Reasonable spot price = index price * (1 + funding rate)

Latest market price description

The latest market price refers to the current market price of the MEME platform. The latest market price is always anchored to the spot price due to the funding fees mechanism, which is why MEME's latest market price does not deviate too far from the spot market price.

In short, MEME has a complete price mechanism to reduce the price difference to ensure a fairer trading environment, thus protecting traders from malicious losses.

Friendly reminder

Digital currency market prices are highly volatile and the latest market prices on the MEME platform may temporarily deviate from the marked price, which may result in significant unrealized gains or losses immediately after placing an order. Note that this does not imply an actual gain or loss and traders need to keep an eye on the change between a reasonable spot price and the latest traded price in order to avoid unnecessary losses from forced liquidation.