FMex adopts the Fair Price Marking system to avoid unnecessary liquidations caused by short-term frequent sharp fluctuations or inadequate liquidity in its highly leveraged products. This system is able to achieve this by setting the Mark Price of the contract to the Fair Price instead of the Last Price.
For Perpetual Contracts, the Fair Price is equal to the underlying Index Price plus a decaying Funding basis rate.
Fair Price Marking only affects Unrealized PNL and the Liquidation Price, it does not affect Realized PNL.
Calculation of Fair Price for Perpetual Contracts
The Fair Price for a Perpetual Contract= Index Price * (1 + Funding Basis)
Funding Basis = Funding Rate * (Time Until next Funding paid / Funding Interval)