> For the complete documentation index, see [llms.txt](https://docs.drake.exchange/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.drake.exchange/trading/price-spread.md).

# Price Spread

## Market Order Price Spread

When executing a market order, Drake applies a price spread on top of Chainlink's low-latency price feed to account for market conditions and liquidity depth.

### Spread Structure

**Price Spread = Fixed Spread + Dynamic Spread**

#### BTC and ETH

* **Fixed Spread:** 0.04%
* **Dynamic Spread:** 0%

#### All Other Instruments

* **Fixed Spread:** 0.04%
* **Dynamic Spread:** Variable based on market conditions

### Dynamic Spread Calculation

The dynamic spread adjusts based on three factors:

1. **Open Interest Imbalance** — The difference between long and short open interest
2. **Order Size** — Your trade's impact on the overall position balance
3. **Market Depth** — Available liquidity at 1% price deviation

**Formula:**

Dynamic Spread = |Open Interest Imbalance + Order Position| / min(1% Depth Bid, 1% Depth Ask)

**Where:**

* Open Interest Imbalance = |Long OI| - |Short OI|
* Order Position (Long) = Trade Size × Instrument Price
* Order Position (Short) = Trade Size × -1 × Instrument Price

**Dynamic spread only applies when:** OI Imbalance ≤ 20% of Total OI Limit

This mechanism ensures fair pricing that reflects real market liquidity and prevents excessive directional imbalance in the vault.