Some basic knowledge of contracts that must be known

Knowledge point 1: What are the mark price and the latest transaction price of a contract?

A contract has two prices: the latest transaction price and the mark price. When users buy and sell, the latest transaction price is generally used by default. The mark price is used for liquidation. In order to objectively reflect the price situation, the mark price is calculated by using the latest transaction price of the foreign exchange through an algorithm.

In other words, as long as the spot price is controlled, the mark price can be controlled, and then whether the contract market will be liquidated.

Knowledge point 2: What is the funding rate of the contract?

In order not to decouple from the latest spot transaction price, the latest transaction price of the contract will be paid from the long position user to the short position user, or from the short position user to the long position user in the form of funding every 8 hours, and the gap between the latest spot transaction price and the latest contract transaction price will be narrowed.

Knowledge point 3: What is the circulating market value of a project?

The economic mechanism of a project depends on the white paper. It is generally divided into project parties, early investors, community airdrops, project treasury, etc. If a project’s white paper is not written transparently enough, it is more likely to be manipulated. For example, although the white paper gives the community enough freedom, it also gives market makers/institutional investors enough freedom - they can arbitrarily acquire low-priced chips at low prices, and once they are acquired, they cannot be diluted because there is no additional issuance or linear unlocking mechanism.