Oracle
The Hyperliquid Oracle System plays a critical role in maintaining the accuracy and robustness of trading operations. It provides reliable price data for funding rate calculations, margining, liquidations, and the triggering of Take Profit (TP) and Stop Loss (SL) orders.
Spot Oracle Price 📈
Definition:
The spot oracle price is computed by validators and serves as a critical input to both funding rates and the mark price.
Key Features:
Published by Validators Every 3 Seconds: Ensures high-frequency updates for dynamic markets.
Weighted Median of CEX Prices:
Prices are aggregated from major centralized exchanges (CEXs), including Binance, OKX, Bybit, Kraken, Kucoin, Gate IO, MEXC, and Hyperliquid itself.
Weights: Binance (3), OKX (2), Bybit (2), Kraken (1), Kucoin (1), Gate IO (1), MEXC (1), Hyperliquid (1).
Final Price for Clearinghouse: The clearinghouse uses the weighted median of validator-submitted prices, with validators weighted by their stake.
Mark Price 📊
Definition:
The mark price is an unbiased, robust estimate of the fair price for perpetual contracts.
Components:
Spot Oracle Price:
Acts as the baseline.
Plus a 150-second EMA Adjustment:
An Exponential Moving Average (EMA) over 150 seconds of the difference between Hyperliquid’s mid-price and the spot oracle price.
This EMA smooths out short-term fluctuations and ensures that any short-lived deviations between Hyperliquid’s price and the broader market are gradually integrated into the mark price.
Hyperliquid Order Book Median:
The median of the best bid, best ask, and the last trade price on Hyperliquid.
External Perpetual Market Median:
The median of the mid-prices from Binance, OKX, and Bybit’s perpetual contracts.
Incorporating prices from these leading exchanges adds another layer of market depth and stability to the mark price calculation.
Special Case:
If only two of the three inputs exist, a 30-second EMA of the median of best bid, best ask, and last trade on Hyperliquid is included.
Usage: Used for liquidations, margin calculations, triggering TP/SL orders, and computing unrealized profit and loss (PnL) for active positions.
Update Frequency: Approximately every 3 seconds, in sync with oracle updates.
Example
Spot Oracle Price: Calculated as $10,000.
150-Second EMA: Indicates Hyperliquid’s mid-price is on average +$20 above the oracle price (i.e. $10,020).
Hyperliquid Median (Bid/Ask/Last Trade):
Suppose the current best bid is $10,005, the best ask is $10,015, and the last trade occurred at $10,010.
The median of these three numbers would be $10,010.
External Perpetual Median:
Imagine the mid-prices from these exchanges are $9,995, $10,000, and $10,010.
The median of these values is $10,000.
The mark price is computed by combining the spot oracle price with the above inputs. In our example, the final mark price might then be in the vicinity of $10,010 to $10,020 (the exact mathematical formula is not publicly disclosed), reflecting both the consensus market price and the slight premium observed on Hyperliquid.
Comparison Table: Spot Oracle Price vs. Mark Price ⚖️
Source of Data
Aggregated CEX prices and Hyperliquid price
Combination of oracle price, Hyperliquid order book data, and external perpetual markets
Update Frequency
Every 3 seconds
Every 3 seconds
Calculation Method
Weighted median (using set weights per exchange)
Composite calculation: spot oracle price + 150-second EMA adjustment + medians from Hyperliquid and external sources
Primary Use
Funding rate calculations
Liquidations, margin calculations, TP/SL triggers, unrealized PnL computation
Additional Adjustments
N/A
Special inclusion of a 30-second EMA if one main input is missing
Uniswap Perpetuals 🦄
Some perpetual contracts on Hyperliquid use Uniswap V2 or V3 AMM prices as their underlying spot asset.
Isolated-Only:
These contracts do not allow cross margining or manual margin removal.
To adjust margin, positions must be partially or fully closed.
Conversion to USDT:
Uniswap pool prices are converted to USDT using robust CEX oracle prices.
Margining and Oracle Usage 💵
USDC Margining with USDT Prices
Primary Style:
Oracle prices are denominated in USDT, while collateral is held in USDC.
This combination maximizes liquidity and accessibility.
Quanto Contracts:
No conversion between USDC/USDT exchange rates occurs, meaning USDT P&L is denominated directly in USDC.
USDC-Denominated Contracts:
Specific Assets:
Only contracts with primary USDC liquidity (e.g., PURR-USD and HYPE-USD) have prices denominated in USDC.
Resources:
This robust oracle system ensures Hyperliquid remains fair, reliable, and transparent for all traders.
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