Due to market manipulation, the market price on the futures exchange can deviate significantly from the spot price, which leads to a mass liquidation of trader positions. Not only does market manipulation cost traders a large part of their hard work, it also destroys public confidence in the entire cryptocurrency trading industry. Bybit’s top priority is to provide a fair trading environment for all traders, that’s why we use the Dual Price Mechanism to prevent market manipulation.

The double rack mechanism includes Reference price and final transaction price

Reference prices

In the case of an inverse contract, the reference price refers to the global spot price index plus a decreasing base rate for the capital premium. The reference price can be viewed as a price that reflects the spot prices in real time on the major exchanges. Bybit uses the reference price as a liquidation trigger and to measure unsettled profits and losses, but this has no effect on the trader’s actual profit and loss. Only when the reference price reaches the dealer’s liquidation price is his position liquidated.

Calculate reference price

Giá Tham Chiếu = Giá Chỉ số x (1 + Phí Vốn Cơ bản)

Phí vốn Cơ bản = Tỷ lệ Phí vốn x Thời gian đến Phí vốn/Chu kỳ Phí vốn

Last transaction price

The final transaction price is Bybit’s current market price. The final transaction price is always set to the spot price via the capital mechanism. Therefore, it is unlikely that the price on Bybit will deviate significantly from the spot market price.

In short, with the Dual Price Mechanism it minimizes price deviations and ensures a fairer trading environment and protects traders from bad liquidations.

**Note: In a volatile market, the last transaction price on Bybit can temporarily deviate from the reference price. This can lead to unresolved profits or losses immediately after the order is executed. Please note that this is not a real gain or loss, but also be aware of the gap between the liquidation price and the reference price.