## Marking-to-Market

Marking-to-Market (also known as marking) is the process of reconciling changes in the value of assets or financial derivatives like perpetuals contracts. Marking requires two steps: first determining a position’s mark price and subsequently calculating the mark profit-and-loss (i.e. the unrealized profit and loss).

### Mark Price

Mark prices on BLADE always equal the underlying index prices. Marking to index/spot prices versus marking to a fair-value/order-book calculation reduces complexity for users and the likelihood of liquidations from illiquidity or market manipulation.

Positions are marked-to-market continuously every second on BLADE.

### Mark P&L for Vanilla Perpetuals

For vanilla perpetuals, a position’s unrealized profit-and-loss is denominated in its contract’s quote currency and equals the number of contracts multiplied by the contract size and the difference between the mark price and the average entry price:

`Mark P&L<sub>Longs</sub> = # of Contracts * Contract Size * (Mark Price - Entry Price)Mark P&L<sub>Shorts</sub> = # of Contracts * Contract Size * (Entry Price - Mark Price)`

For example, if a user is long 100,000 contracts of the BTC/USDT vanilla perpetual with a contract size of 0.0001 BTC at a current mark price of ₮0.40 and an average entry price of ₮0.30, the position’s unrealized profit-and-loss would be:

`Mark P&L = 100,000 * 0.0001 * (₮0.40 - ₮0.30) = ₮1`

### Mark P&L for Inverse Perpetuals

For inverse perpetuals, a position’s unrealized profit-and-loss is denominated in its contract’s underlying currency and equals the number of contracts multiplied by the difference between the contract size divided by the average entry price and the contract size divided by the mark price:

`Mark P&L<sub>Longs</sub> = # of Contracts * (Contract Size / Entry Price - Contract Size / Mark Price)Mark P&L<sub>Shorts</sub> = # of Contracts * (Contract Size / Mark Price - Contract Size / Entry Price)`

For example, if a user is long 10,000 contracts of the BTC/USD inverse perpetual at an average entry price of \$10,000 and a current mark price of \$15,000, the position’s unrealized profit-and-loss would be:

`Mark P&L = 10,000 * (\$1 / \$10,000 - \$1 / \$15,000) = ₿0.33`