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A Mark of Victory is a special award and is stored in your Personal Inventory similar to Pennants and Commendations.

PvP

Marks of Victory are rewarded for defeating other players in PvP combat. You only recieve marks now if the enemy player is 15 levels below or above you.
For each Mark Of Victory received, you also gain a Mark of Trade, exchangeable for different rewards.
A very few missions also reward Marks of Victory.

Trade

Marks of Victory are tradeable. This means they can be listed on the Auction House. This is to give PvP players a way to profit from their high-risk endeavors while PvE or Economy focussed players get access to the rewards provided by Marks of Victory.

Rewards

Marks of Victory can be turned in for various rewards at the Prize Agent in the Admiralty Office in your Nation's Capital for Nationals or the Crime Lord's Office in Tortuga for Pirates.
Note that you will only have the option to receive the highest level European Commendation that is available at your level.

Marks Class Rewards
1 All 100 Explosive Round Shot
Smelling Salts
5 All Various clothing items
5 Mark of Trade
10 Naval Officer Refit: Naval 'Mediator' Cutter (Used to create 'Lancer' Naval Cutter)
Pirate Refit: Pirate 'Curieuse' Snow (Captured) (Used to create 'Fallen' Refit Snow)
Privateer Refit: Privateer 'Hermes' Packet-Boat (Used to create 'Expedition' Privateer Packet-Boat)
20 Naval Officer Refit: Naval 'Stralsund' Frigate (Used to create 'Falcon' Naval Frigate)
Pirate Refit: Pirate 'Agamemnon' Bark (Captured) (Used to create 'Reaper's Grasp' Refit Bark)
Privateer Refit: Privateer 'Cerberus' Frigate (Used to create 'Arrow' Privateer Frigate)
25 All European commendation, Minor
30 All Discordant Cannons 1
Discordant Grapples 1
Discordant Reinforcement 1
Discordant Rigging 1
Naval Officer Refit: Naval 'Defiant' Frigate (Used to create 'Gallant' Naval Frigate)
Pirate Refit: Pirate 'Santiago' Galleon (Captured) (Used to create 'Neptune's Disgrace' Refit Galleon)
Privateer Refit: Privateer 'Raa' Frigate (Used to create 'Discovery' Privateer Frigate)
All Treacherous Cannons 1
Treacherous Rigging 1
35 Naval Officer Refit: Naval 'Mordaunt' Fourth Rate (Used to create 'Reason' Naval Fourth Rate)
40 Pirate Refit: Pirate 'San Mateo' Galleon (Captured) (Used to create 'Abaddon's Will' Refit Galleon)
45 All European commendation, Major
Buccaneer Refit: Buccaneer 'Leviathan' Bark (Captured) (Used to create 'Bahamut' Refit Bark)
Cutthroat Refit: Cutthroat 'Arcadia' Mastercraft Xebec (Used to create 'Red Devil' Xebec)
50 Naval Officer Refit: Naval 'Defiant' Mastercraft Frigate (Used to create 'Mercy' Naval Frigate)
Pirate Refit: Pirate 'Myrmidon' Frigate (Captured) (Used to create 'Cursed Blade' Refit Frigate)
Privateer Refit: Privateer 'Capricieux' Frigate (Used to create 'Intrepid' Privateer Frigate)
Privateer Refit: Privateer 'Myrmidon' Frigate (Used to create 'Achilles' Privateer Frigate)
30 All Discordant Cannons 2
Discordant Grapples 2
Discordant Reinforcement 2
Discordant Rigging 2
Treacherous Cannons 2
Treacherous Rigging 2
75 plus 75 Marks of Trade Buccaneer Refit: Buccaneer 'Wenden' Third Rate (Used to create 'Treason' Pirate Flagship)
45 All Discordant Cannons 3
Discordant Grapples 3
Discordant Reinforcement 3
Discordant Rigging 3
Treacherous Cannons 3
Treacherous Rigging 3

References

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